The claim comes from property management firm Rushbrook & Rathbone – which claims the main targets for scams are university towns attracting large numbers of students from overseas.
Peterborough City Council is also one council looking at ways of combatting illegal houses in multiple occupation as landlords rent short term homes to migrant workers.
The bogus landlords collect money from their sub-letting tenants while paying the unsuspecting owner the agreed buy to let rent.
The real landlord never finds out about the sub-letting unless something goes wrong at the home.
The scammers target landlords who rent direct, as they are not as likely to check out properties and carry out reference checks as letting agents
Sarah Rushbrook, of Rushbrook & Rathbone, said: "It is no new phenomena or trend that is happening, but sub-letting is now becoming a lucrative business in today's marketplace with some tenants renting a number of properties and then letting them out as rooms.
"It is an increasing problem, particularly in larger cities and university towns where many of the people subletting are foreign students who find these rooms through the internet.
"Unethical in every sense, these tenants pay no tax on the income they earn so as well as defrauding their landlord they are also defrauding the Inland Revenue."
Buy to let victims of sub-letting scams can do little other than go to the courts to evict the people living in their homes.
However, Westminster Council has successfully prosecuted a former tenant who must repay £10,000 out of the profits she earned.
Kelly-Louise Goatley was sentenced to nine months in prison suspended for two years and 140 hours community work last year for subletting her flat for £1,400 a month.
Now, the council has won a court order demanding she pays £10,000 plus £2,000 costs out of the money she made letting the flat.
