Council housing rents have been earmarked for an increase of 5.75 per cent next year.
The proposed increase means an average weekly rent increase of £4.51 for a council home.
The recommended rise for the 2014/2015 financial year follows a 6.29 per cent increase this year.
The increases follow a Government policy which aims to bring parity to housing association and public sector rents.
The council adopted a ‘smoothing’ convergence policy in 2012 - increasing rents gradually over five years - in order to meet the Government target.
The policy aims to cushion tenants from larger annual rent increases while allowing the council to avoid more than £13 million in interest payments over the five years.
The interest payments follow a £72.9 million low interest loan the council was compelled to take out by central government to take full financial control of its properties.
The smoothing policy also allows the council to carry on investing in new homes and improving its existing properties.
Work recently started on the development of 23 new homes in Pettiver Crescent, Hillmorton, while next year’s draft housing budget contains further investment in the improvement programme for existing council properties.
Improvements to council properties earmarked for next year include replacing electric with gas central heating, and replacement windows.
Cllr Leigh Hunt, Rugby Borough Council portfolio holder for sustainable inclusive communities, said: “We understand a further increase will be hard for many tenants, but we must set rents which keep our loan repayments down while allowing us to invest in new homes and improve our existing properties.
“Our rents remain significantly below market rents in the private sector and also below those of housing associations.
“Although any increase will be unwelcome, we have tried to minimise the impact on our tenants over the next few years.
“Any tenant who experiences problems paying their rent should call their housing officer on the usual number.”
If approved by the council’s cabinet, the draft housing budget for 2014/2015 will be considered at a meeting of the full council in February.