Tower Hamlets Council is planning to hike council rent by 7 per cent but says it will mostly ‘freeze’ council tax under draft plans for the 2023/24 budget.

The authority plans to freeze its element of council tax for the next financial year, but will still introduce a 2pc adult social care precept to deal with huge demands in the borough.

Kevin Bartle, a council officer and author of the report, said: “A freeze in the Tower Hamlets element of council tax is proposed, only levying the 2pc adult social care precept to meet significant demographic pressures within that area.

“The council is making a significant new and additional investment in services and is drawing down £22.3m from reserves to balance the 2023/24 budget. It will be important to continue work to balance the budget over the medium term, ensuring alignment with the refreshed strategic plan.”

However existing council tenants will see their rent increase by 7pc for 2023/24, which is expected to generate £5.5m of additional income for the council’s housing revenue account.

The extra money will be spent on investing in the council’s existing housing stock, as well as supporting the mayor’s plans to build 1,000 new social homes for rent each year.

Commenting on the rent increase, Mr Bartle added: “The [housing revenue account] is currently experiencing unprecedented increases in its costs resulting from Brexit, the Covid pandemic and the cost of living crisis following the war in Ukraine.”

He said the housing revenue account is experiencing high inflation and interest rates that are beyond the 7 pc rent increase, but that “the council is therefore also bearing a proportion of these cost increases and not passing them all on to the tenant”.

If a council tenant was previously paying a weekly rent of £103.64 for a one-bed flat, their new rent will be £110.89 for 2023/24, as outlined in the report.

The council’s budget report for 2023/24 will be presented to cabinet later this month.