Council tenants have been told they will not face a larger than expec- ted rent increase because of a 'hole' in the housing budget.

Earlier this month, Oxford City Council delayed setting the housing budget, which is funded by 8,000 tenants' rents, because of an estimated £750,000 overspend in the trading account of Oxford Building Solutions, which carries out repairs to the local authority's properties.

At yesterday's meeting of the council's executive board, it was revealed that the deficit was £179,600, not £750,000 as first thought.

When the deficit was first discovered, there were fears there would be a rent increase in April above the predicted 3.5 per cent, but tenants have been told this is not the case.

Liberal Democrat councillor Jock Coats said: "The board has agreed the deficit will be covered by balances in the housing budget at the end of the financial year in April.

"We would like to reassure tenants."

Cllr Coats added that during the summer, a review of the activities of Oxford Building Solutions, formerly City Works, would take place, to identify how the service should be run in future years.

Cllr David Connett, executive member for housing, added: "This has prompted a fundamental review about how we manage our housing stock strategically.

"We need to start thinking three, five, and ten years down the road, and focus on keeping our properties in a good condition."

Jenny Clamp, a spokesman for Blackbird Leys Tower Blocks Association, said: "It's a relief that tenants are not facing a huge rent increase.

"We realise there has to be an increase each year to cover improvements to the housing stock but, when this deficit was discovered, it was worrying."

A meeting of the council on Monday is expected to ratify the housing revenue account budget.