Blackburn with Darwen Council has shelved a licensing scheme amid warnings that it could drive landlords out of the sector.
The scheme was set to cover 1,100 properties in the Hollins Bank area near the centre of the town.
However the council changed its mind after a consultation with letting agents, landlords and tenants.
Quesir Mahmood, executive member for growth and development, told the council’s cabinet: “Landlords were generally unhappy with the proposals and felt that the council had already made their decision, and could be using this action to punish them.
“Landlords also questioned the proposed licence fees to be charged and asked how they would be used to provide support and resources for landlords.
“The proposed licence fee charge could directly impact tenants, as landlords would undoubtedly push additional costs onto their tenants through increased rents.”
He added: “A further concern which could arise is that landlords may decide to sell their properties if refurbishment costs are high, or legislation becomes cumbersome.
“This will result in reduction in availability of rental properties for those unable to access affordable rental homes.”
The report warned that if 10% of landlords sold up or ended tenancies some 115 individuals or families would need to be rehoused.
Meanwhile demand has risen against demand since the licensing scheme was first proposed.
