Swansea Community Cottage runs community events, children's play groups, crafts groups and before and after school care at Swansea Centre.

The cottage sublets one of the centre's rooms for a small fee, collecting about $50 each week.

However, unlike other neighbourhood centres, the cottage has restricted access to the other rooms.

Last August, Lake Macquarie council conducted a lease equity review, which examined contributions paid by community groups that leased council facilities.

The cottage was one of 49 groups to be reviewed.

It was recommended the cottage's $3800 annual contribution jump to $4000 this financial year and increase by 11 per cent each year thereafter for five years to reach $6750.

In September, the council published a table of submissions received by each group when they were notified of the rent increase.

It stated 21 groups raised concerns, however, the cottage was not one of them.

Swansea Community Cottage managing committee secretary Sue Thornton said there was no consultation with the group and the first they heard about the price hike was in January.

"We don't know where they got the 11 per cent from, it's just excessive," Ms Thornton said.

She submitted a letter on February 24 outlining her concern that the cottage was unable to pay the rent.

The council replied on March 14, stating the lease could not be changed unless the cottage could demonstrate financial hardship.

The cottage was one of three groups to claim financial hardship, along with Southlake Community Services and the Lake Macquarie Miniature Aircraft Club.

However, the miniature aircraft club was the only one exempted when the matter went before council last Monday.

Ms Thornton said the cottage had sent the council financial statements, budgets and finance-related material.

She said the group was shocked the recommendation was passed.

"How are we supposed to pay it?"