Plans to force landlords across Britain to check the immigration status of potential tenants will be challenged in court this week after claims that they are causing serious discrimination.

Landlords, politicians and immigration lawyers have all raised concerns about the “right to rent” policy, a key branch of the government’s attempt to create a “hostile environment” for illegal immigrants.

Under the rules landlords face fines, or even prison, should they house people with no right to be in the country. However, there is now evidence that landlords are ignoring tenancy applications from people with “foreign-sounding” names, from ethnic minorities, and from those without British passports. Choosing someone with a British passport means landlords do not have to carry out additional online checks.

The case follows criticism of the policy during the Windrush scandal, which saw those with full rights to stay in the UK prevented from taking a job, renting a house or claiming benefits because they could not prove their status.

Ministers will face a legal challenge in the high court this week in a case brought by the Joint Council for the Welfare of Immigrants (JCWI), which claims that the policy is incompatible with the European Convention on Human Rights and must be reviewed before it is rolled out any further.

Research by the JCWI found that, as a result of the scheme, 51% of landlords said that they were now less likely to consider renting to non-EU nationals, while 42% were now less likely to rent to those without a UK passport. The latter figure increased to 48% when landlords were explicitly asked to consider the criminal penalties in place.

Another survey by the Residential Landlords Association (RLA) of almost 2,800 landlords found that 43% were less likely to rent to anyone without a UK passport, and 46% less likely to rent to a foreign national from outside the EU.

The “right to rent” proposals have been controversial since their inception under the coalition government. Eric Pickles, the former Conservative communities secretary, was among those who opposed their introduction, suggesting that the plans would force anyone worried about their immigration status into the arms of rogue landlords. They have since been rolled out across England, but not yet to the devolved administrations in Scotland, Wales and Northern Ireland.

The RLA, the Equality and Human Rights Commission, the Joseph Rowntree Foundation, Shelter, the Chartered Institute of Housing, Crisis, the Immigration Law Practitioners Association, the United Nations high commissioner for refugees, and Liberty are among the groups to have raised concerns.

Phillippa Kaufmann QC, who is representing JCWI, said the group was arguing that the policy was clearly affecting people who were in Britain legally. “Landlords are incentivised by the very nature of the scheme to go down the path of least resistance,” she said. “If they have someone who comes to them with a British passport, they know they are at no risk of criminal liability.

“JCWI argues that the government is not in any position to justify this policy because it has not gathered any evidence that its ‘hostile environment’ is having any effect – that is, the desired effect of prompting illegal migrants to leave, rather than going underground to be exploited by rogue landlords.

“It can’t show that it is achieving that end, and it can’t show it has given any consideration of the unintended impact it is having.”

A Home Office spokeswoman said: “It would be inappropriate to comment on ongoing legal proceedings.”