Landlords are costing the Treasury £183m in tax in London alone, by not declaring their rental income.

The warning has come from Newham Council, which says landlords are taking rent in cash.

The authority has done its sums using its own database of 20,000 landlords in the borough.

Using these figures, it estimates that landlords are avoiding £183m in tax across London, by accepting £508m in rent paid cash in hand.

Newham has written to the Treasury highlighting the problem and proposing a joint project to stamp it out.

However, Newham said the Treasury has so far not responded.

Sir Robin Wales, mayor of Newham, said: “After just one full year, our licensing scheme has proved to be tremendously successful. We are already starting to see an improvement in our private rented sector by taking tough enforcement action on rogue landlords to improve the lives of tenants.

“Without our substantial investment into our licensing scheme, this fraudulent activity would go unchecked. The Government has the opportunity to recoup millions of pounds in undeclared tax from unscrupulous landlords, yet is refusing to engage with us in support of this.”