A maximum annual rent rise of £500 has been approved at a time when "the ordinary Joe is struggling to make ends meet".
City councillors gave the green light to the 7.7 per cent increase for social housing tenants in Oxford during a full council meeting on Monday night.
The figure is the maximum amount permitted under UK law with Oxford following in the footsteps of a number of other councils across the country who have already introduced the price hike.
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Edward Mundy, of the Holywell ward and newly formed Oxford Socialist Independents Party, said: "It is very disappointing to see the maximum amount of rent being passed on to people in our city.
"This will impact the poorest people first of all."
An average weekly increase of £9.27 is the result of the rise with a decision also made to increase rent for garages by 7.7 per cent.
Independent councillor, Sajjad Malik, said: "It is being introduced at a time when the ordinary Joe is struggling to make ends meet."
The Temple Cowley ward councillor went on to reference "vanity projects" such as the resurfacing of a car park opposite the ice rink and suggested money here could have been put to better use.
But council leader Susan Brown pointed out that general fund money was separate to money obtained from social housing rent.
The rent rise for garages had previously been recommended at seven per cent.
But it was later amended to the maximum amount permitted after a councillor questioned the decision.
Ajaz Rehman, an Independent Group councillor for the Lye Valley ward, said he was surprised intervention had been needed to increase the rent on garages given the council's apparent drive towards cutting car use.
Cabinet member for housing, Linda Smith, added after the meeting: "Around half the garages in Blackbird Leys are vacant."
Recommendations for the rent rises were approved by the council although around half abstained from voting.
Liberal Democrat councillor, Dr Christopher Smowton, of the Headington ward, said: "It is deeply regrettable the council is in this situation."
He suggested that government funding was lacking.
A council report stated ahead of the meeting: "The main risk is that the increases are not approved resulting in an unsustainable financial position that would require significant reductions in the provision of services and support to its residents.
"A rent increase that is lower than inflation will have a detrimental impact on the viability of the House Rent Allowance (HRA) as the income will not be able to keep pace with rising costs and as a consequence would be at risk of failing its tenants in the supply of services and support."
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