A city council is to decide this week whether to take its first steps towards running its own lettings agency.

Cambridge Labour councillor George Owers said a lettings agency should be operated by the council to save tenants from “extortionate” fees.

Currently the Lib Dems are in power in Cambridge – but only just. Out of 42 seats, 21 are held by the Lib Dems, 19 by Labour, with one seat apiece for a Tory and an Independent. The balance of power could easily change next month, with 14 seats being contested in local elections.

Cllr Owers said the issue of fees was particularly acute in Cambridge, where he said rents rose 8% last year.

He said: “We think it is time for the city council to consider a different approach to the private sector which could benefit the many good landlords in Cambridge as well as hundreds of tenants.

“One of the worst symptoms of this overheated market is the unfair practices of some letting agents who exploit their strength by, among other things, charging extortionate fees of hundreds of pounds for nothing more than writing a letter.”

Cllr Owers said a publicly-owned agency could also help tenants avoid having their deposits unfairly withheld, which he said was a risk in the private sector.

He suggested the agency could be an extension of Town Hall Lettings, an agency set up by five Cambridgeshire authorities to help house families facing homelessness, or could be an entirely new organisation.

The motion calls for a report on the feasibility of the project.

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