A new market of around 100,000 new private renters was created at a stroke as housing benefits were cut for singles under 35.

Letting agents and landlords can expect a massive increase in inquiries for rooms in shared houses from January because of the cut.

The decision means singles aged under 35-years-old will only receive housing benefit for sharing a room in a house in multiple occupation (HMO) rather than self-contained housing.

The government reckons the change affects around 90,000 singles aged 25 – 34 years old who will have to give up their homes to look for places in a shared home.

The ruling will result in a demand for shared housing at the same time as councils in around 25 large towns and cities are taking on powers to curb the development of HMOs.

A group of councils led by Milton Keynes is mounting a legal challenge in the High Court to try to force the government to give them more powers to control HMO development.

The Residential Landlords Association (RLA) is concerned the government has underestimated the problem as the latest English Housing Survey disclosed the number of tenants in the age group is around 1.16 million.

RLA policy director Richard Jones said: “This move comes at a time when because of a power granted to them by the Government, many councils are restricting the amount of shared accommodation available, particularly in our large cities where most young people want or need to live.”

“We find it illogical that whilst the Government increases the number of people who will be forced into shared housing, councils across the country are looking to use new planning powers to restrict its availability resulting in many young people struggling to find somewhere to live.

“The Government is simply failing to practice joined up thinking. We therefore call on the Government to suspend the planning powers and remove restrictions on creating the increase in shared accommodation that is going to be required.”