Croydon Council could face a legal challenge over plans to introduce a ‘tenant tax’ on rented properties in the borough which could see rents rise by £200 a year.

It wants to make landlords pay £1,000 for a five year licence per property they own, with fines of up to £20,000 if they rent out a home without a licence.

The council believes the legislation will improve standards in the private rented sector by dealing with rogue landlords, reduce anti-social behaviour and improve the quality of homes available in Croydon.

Running the scheme each year will cost an estimated £4.560m a year, creating 20 staffing roles, including a manager paid about £80k a year.

The council hopes the fees would pay for this outlay. Fees would have to be collected from 22,800 landlords to meet the cost.

Fears have been raised the cost will be passed on to tenants, meaning yearly rents could rise by £200 a property.

In a Department for Communities and Local Government review of property conditions in the private rented sector nationwide, concerns were raised that this kind of scheme unfairly penalises good landlords.

Croydon members of the National Landlords Association (NLA) are meeting tomorrow (Thursday) to discuss methods to block the council's plans, including launching a judicial review.

NLA policy officer Gavin Dick said: "These proposals will simply mean higher rents as the increased costs will be passed through to tenants in the area.

"The changes would also make investing in properties in Croydon a less attractive prospect for landlords and will only serve to decrease the availability of affordable housing.

"There is clearly a strong desire to push through these proposals but Croydon Council has yet to respond to our invitation to justify the proposals, and has done little to make landlords or tenants aware that the consultation is live.

"The NLA’s meeting will discuss how the people of Croydon can influence the decision and find out how to have their say in order to stop the council’s costly proposals."

Conservative MP for Croydon Central, Gavin Barwell, will be speaking against the scheme at tomorrow night’s meeting.

He said: "It doesn’t take a genius to work out what will happen if this scheme goes ahead - landlords will simply pass the additional cost on to their tenants.

"Introducing a stealth tax, which will lead to some of the most vulnerable people in society facing even higher rents, is beneath contempt."