Since academics first flocked to Oxford from Paris in the 12th century, providing a much-needed fillip for the nascent university here, scholars have always lived in ‘digs’, or rented homes shared with other students.

Now that practice — which of course also applies to people who are not students — is to be sharply changed courtesy of Oxford City Council regulations due to come into force on January 1 next year.

The new rule governing houses in multiple occupation (HMOs) will mean that any landlord wanting to rent a home to three or more people who are not from the same family, will need to obtain a licence costing an initial fee of several hundred pounds followed by annual renewals.

Frank Webster, of Summertown letting agents Finders Keepers, believes the new rules are already affecting the availability of homes for key workers.

He said: “Two teachers and a nurse walked into our East Oxford office on June 22 asking about a house they had seen advertised. These are precisely the ‘key workers’ which Oxford City Council is worried about housing. But because of the new additional licence, the landlord of the house faced a bill of £1,150 just to let them live in his house.

“The landlord could not make the sums add up and so we had to say to the prospective tenants, ‘sorry but you can’t see the house’. As a result, the supply of homes for young sharers is reduced.”

But Joe McManners, the council’s executive member for housing, said: “It would cost £362 for the first year (which covers the cost of the initial inspection), then £150 per year after. It simply isn’t true to say their landlord would have to fork out £1,150 initially — it is roughly that over four years.

“When you consider a monthly rent of about £1,500, it wouldn’t seem to make sense to use this as a financial reason to exit the HMO market, which is more lucrative than general letting.”

There are two distinct schemes being introduced.

Both affect the way HMOs will be managed in Oxford in the future. The first, the additional licensing scheme, is designed to raise standards of HMOs in the city. The second, known as HMO planning use scheme, is designed to cut back their number in particular streets and areas — with the maximum proportion of HMOs in any given street limited to 20 per cent.

One in five Oxford residents lives in a shared home and a 2005 survey revealed 70 per cent of Oxford HMOs were “unsafe”. Council officers get more than 2,000 complaints a year about them.

Dr McManners added: “It is important to realise here that we are not aiming to reduce the total number of HMOs in the city but instead to control concentrations of them in particular places.”

In January this year, Oxford became the first city in Britain to launch a licensing scheme in a bid to tackle rogue landlords and troublesome tenants when it introduced a £3.7m scheme to make owners of houses occupied by five or more unrelated tenants apply for licences. But in January next year, the next stage of the scheme will be introduced to cover homes lived in by three or more such people.

Dr McManners said that owners of HMOs now in operation would automatically obtain “established use” planning permission for them if they applied this year.

He added that if they failed to apply before February next year they risk being refused permission under the 20 per cent in any one street rule.

He said: “The council has taken these measures as there is still a big problem with the standards of accommodation in HMOs. Last week the environmental health team had to take action as a landlord had two tenants living in a garage without heating for several months.

“We need to take this additional action to ensure properties meet basic minimum standards. We do understand some landlords and letting agents won’t be happy at having to be out of pocket, but the costs of an HMO licence reflect the work taken to inspect the properties, and for a three-bedroom house the initial cost is £362 and the yearly renewal is £150.

“It wouldn't seem to make much financial sense for landlords to not get a licence. At last, too, tenants will know they have a property and landlord meeting necessary standards.” But Mr Webster said: “We believe the council already has sufficient powers under the 2004 Housing Act to tackle any isolated problems caused by the very small minority or irresponsible landlord, tenants or mismanaged properties.

“This new legislation is unnecessary and draconian.

“The combination of these new measures could have a very unsettling effect on the price of properties. Investment landlords may decide the yield is too small to invest.”

Mark Crampton Smith, of letting agent College and County, agreed. He said: “Poor old owner occupiers living in areas now containing many HMOs might find their family home is up to 30 per cent less valuable than the run-down HMO next door because it would not command a comparable rent and could not obtain a licence to become one.”

He added: “I predict this will be a very short-lived piece of legislation because it will be impossible to police. Some unscrupulous landlords will claim their properties had HMO established use status when they did not.”

Any extra costs will be passed on to tenants in the end, pushing up rents.

Mr Crampton Smith added: “For six or seven hundred years there has been a symbiotic relationship in the Town and Gown housing market in Oxford and this attempt to regulate it will not succeed.”

Only time will tell.