Ratepayers across NSW will be slugged with higher council fees after a ruling from the pricing regulator.

The Independent Pricing and Regulatory Tribunal on Tuesday gave the green light to councils to raise the rates they charge home owners by up to 2.7 per cent in 2019/20.

The increase is the biggest in recent years, mostly due to higher labour, energy and construction costs, IPART says.

Rates were only allowed to go up 2.3 per cent this financial year and 1.5 per cent a year in 2017/18.

Chairman Peter Boxall said it was up to each council to decide whether to apply the increase in full and across all households, businesses or other ratepayers.