Rogue landlords and letting agents face higher fines, being potentially blacklisted from the property industry and being forced to repay rent taken since the start of a tenancy under proposals outlined by the government this week.

One aspect of the plans – the eviction of immigrants living illegally in Britain – attracted the most headlines, but other proposals suggest that the government is considering a transformation of the private rental market.

The Department for Communities and Local Government has said that the existing level of fines against rogue landlords are failing to have an impact and are just written off as a business expense. Proposals in the DCLG’s “Tackling rogue landlords and improving the private rental sector” paper include:

• A blacklist of rogue landlords and letting agents.

• Minimum fines for repeat offences and rent repayment orders.

• New powers for local authorities to seize private rentals.

• A “fit and proper person” test for landlords.

• New civil penalties and fines against landlords for overcrowding, damp, disrepair and vermin infestations.

The proposals come amid growing concern over the state of the private rented sector. The DCLG said 84% of private renters are satisfied with their accommodation, but that a small number of rogue landlords are causing “acute and complex problems”.

When the government gave £6.7m to a few local authorities to inspect 40,000 privately rented properties, they found 3,000 were so poor that enforcement action or prosecution were required.

Magistrates are, in theory, able to impose unlimited fines against landlords but, in practice, the average is just £1,500 as the courts have to take into account the means of the offender. It found that one landlord was fined less than £1,500 for operating an unlicensed HMO (house in multiple occupation) that was “severely overcrowded and in extremely poor condition”.

Rent repayment orders were introduced in 2004 but few have been issued. The DCLG is suggesting a wider definition of the law, which could mean that a landlord who fails to comply with local authority orders on things such as damp could be forced to repay all the rent they have received.

But it is the proposals for new civil penalties that could have the biggest impact on landlords. Prosecutions are rare as few local authorities have the resources to take landlords to court. But civil penalties (along the lines of parking tickets) could be issued without recourse to the courts and applied easily and widely.

The DCLG said civil penalties could be issued against landlords and letting agents who permit overcrowding and let properties fall into disrepair, as well as for poor sanitation, electrical faults, damp and vermin infestation. Fines could be as high as £5,000.

In July, the Guardian published an investigation into the UK’s worst landlord, Katia Goremsandu, who topped the Ministry of Justice’s list of landlords prosecuted under the Housing Act. She has been convicted seven times, but fined just £16,565, despite having a rental income estimated at around £188,000 a year. Among other offences, she used a sticker to disguise a faulty fire alarm and left tenants living in damp and freezing homes, despite council warnings.

Goremsandu, who owns several rental properties in Haringey, north London, told the Guardian she was being “victimised and harassed” by the council, adding that she was at the heart of “a war between the landlords and the tenants … who begrudge the fact that we have property”.

Landlord Katia Goremsandu has converted one house into five flats, even using the garage. Photograph: Tom Wall

The campaign group Generation Rent has welcomed many of the proposals. A spokesman says: “It was a shame the immigration checks led the coverage as there are a number of policies the government is proposing that we have been calling for, such as sharing tenancy deposit data to help with enforcement, the ability for councils to levy fines they can keep and expanding rent repayment orders. These will make it easier for authorities to target criminal landlords, easier to bring them to justice and easier to protect tenants from unsafe housing.

“The government could go further and bring in a licensing regime that will cover the whole private rented sector. The DCLG is highlighting the importance of the existing regime – for HMOs – in rooting out the worst landlords and is bolstering it with a fit and proper person test. It should be prepared to expand it to all landlords.”

But letting agents say the new regulations will be just another burden on legitimate businesses and will fail to catch persistent offenders.

“By the time you have dealt with money laundering and the Estate Agents Act, among other pre-letting procedures, you have bound yourself with so many administrative tasks that the actual letting itself becomes secondary,” says Trevor Abrahamson of letting agent Glentree. “The government should take some of the burden away from business by taking on some of the responsibilities itself using statutory powers to enforce procedure.”

Others initiatives to control rogue landlords or improve practices have largely flopped, say critics.

A scheme launched by the London mayor, Boris Johnson, to improve the standard of rented property in the capital was branded a flop after it was found just that 0.2% of adverts for homes to let mentioned that the landlord or letting agent had signed up.

Since October last year, letting agents have been required to tell tenants about which ombudsman redress scheme they have joined, but many have failed to sign up and have faced little or no enforcement action.

A spokesman for the Association of Residential Letting Agents says: “We are staunch advocates of any moves to improve standards in the private rented sector and welcome the consultation.”