COUNCIL tenants in Sheffield will face an inflation-busting 3.6 per cent rent increase in April, in what could be the first in a series of large annual rent hikes.
The measure - announced in the housing budget to be approved by Sheffield Council cabinet next week - means average council rents in the city will go up by just over £2.07 a week, or £108 a year.
The hike - which is set by the Government - is 2.1 per cent higher than rents set a year ago.
But because rents were cut last August, tenants will be paying a 3.6 per cent rise at the beginning of April.
It is also higher than the rate of inflation which stands at 2.9 per cent.
The council has warned the Government is going to push through bigger increases in the next few years, as it seeks to match council rents to housing association prices by 2013.
The Government wants council tenants to pay the same as housing association tenants - who currently pay just over £63 a week on average - by 2013, meaning steep council rent increases in the next three years.
The Lib Dem council's housing spokesman, Coun Bob McCann, said: "Tenants could soon be facing hundreds of pounds extra on their annual rent bill. This is unacceptable."
Coun McCann said this year's rise will be used to improve frontline services, bolstered by a £3 million increase in the housing subsidy Sheffield receives from the Government.
He announced the extra money will go on revamping vacant properties, improving maintenance standards, and increasing the number of inspections.
But he said the focus on frontline activities will mean cutbacks in other areas.
Sheffield Homes - which manages the city's 42,000 council properties - will not get an increase in its £29.9 million management fee, and the council has asked it to find £1.4 million in backroom savings so it can focus on frontline services.
Part of the savings are to come in the form of a 10 per cent decrease in the cost of senior management, which will save £108,000.
Council leader Paul Scriven said: "We suggested that Sheffield Homes take the same approach that council has taken and decrease the cost of directors' salaries - those earning more than £50,000 - by 10 per cent.
"This wasn't something they had looked at themselves, but I think they are now going to do the right thing to ensure that frontline services are protected."
A council source said it was understood Sheffield Homes would meet the £108,000 cut by freezing directors' pay and cutting one post.
But the organisation is also likely to have to make other cutbacks to meet the council's demands.
A Sheffield Homes spokeswoman said nobody was available for comment, but the company was aware of the council's housing budget report which is set to be approved next week.
Some services will be affected. Grounds maintenance is to be scaled back - saving £100,000 a year - and Sheffield Homes staff face a nervous few months as the organisation tries to find savings elsewhere.
Coun McCann, suggested some of the other £1.3 million in required savings could be met by reducing staffing levels as the Decent Homes improvement scheme comes to an end.
He said: "The economy remains a challenge but we are giving value for money by managing our resources in the best way possible.
"This is the first time that we have consulted fully with tenants and the budget reflects their comments and priorities. We have been open about the challenges we are facing and their input has been invaluable."
The council's housing budget will increase from £165 million in 2009/10 to £171 million in 2010/11 - with £38 million of government subsidies - but Richard Palmer, director of the council's neighbourhoods programme, warned the next few years could see a squeeze on housing.
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