Under the proposals, to be discussed at Barnet council’s housing committee on Monday, new tenants on lifetime secure tenancies and all tenants living in newly built council homes will pay 65 per cent of the average market rent.
Existing tenants face an average rise of seven per cent from April 2016 – an average of £7 per week – with the weekly increase capped at £10 each year until the target rent is reached.
Flexible tenancy rents will be based on 50 per cent of average market rents for new tenants, and will increase to 65 per cent if renewed.
The authority said the increases will raise £18.3million by 2020, and will help fund the building of 500 new council homes.
Councillor Tom Davey, chairman of the housing committee, said: “This policy will help to provide much needed housing in Barnet, while creating a level playing field between council and housing association rents that will end the current allocations lottery.
“The new system will give a hand up to residents when they need it most, not a hand out.”
Labour councillors have accused the Conservative administration of a “major climbdown” after earlier proposals which could have seen rents rise to 80 per cent of market rate were dropped.
Councillor Ross Houston, Labour’s housing spokesman, said: “This is an embarrassing major climbdown from the Tories on a policy they were hell-bent on implementing.
“The council report makes clear that they have finally admitted people would not be able to afford the massive rent increase that was proposed.
The proposals will be discussed at the housing committee on Monday, June 29.
If the policy goes ahead, a public consultation will take place for ten weeks before the committee considers the results in October.