A High Court ruling has quashed a rent rise of 24% by Christchurch City Council for social housing tenants.
The increase for tenants in more than 2500 units took effect in July this year. The council says it was necessary to cover maintenance costs.
But the Council of Social Services asked for a judicial review and Justice Chisholm has ruled that the council failed to follow the proper decison-making procedures.
Justice Chisholm says the tenants have been "substantially prejudiced" as a result.
The decision will be quashed. Justice Chisholm has allowed two weeks for negotiations to take place on what could be an appropriate rent increase, if any.
The Council of Social Services says it is "delighted" that the decision has been overturned.
Mayor Bob Parker says it is a disappointing result because the rent rise was going to pay for maintenance on the houses.
He says the council has not ruled out an appeal of the decision.