The city council in Peterborough set up the licensing scheme eight months ago and has inspected more than 500 properties.

Landlords in part of the city have to pay for a licence if they want to let out a property and it helps fund an inspection contract to increase checks on rented homes.

Inspectors say some of the conditions people are living in are “horrendous”.

Property Inspector Mark Curtis, who works for Home Safe which operates in partnership with the council, said a recent visit was the worst he has witnessed.

“I’ve done hundreds of inspections but I’ve never seen anything like this,” he said.

“Looking at the human side, we’re well aware that a young family is living there, it’s heartbreaking.”

Each property covered by a licence must undergo inspections. So far inspectors have found problems including severe damp and mould, missing smoke detectors, and poor ventilation.

When issues are identified, landlords are asked to rectify them and improve living conditions.

Senior housing compliance officer for the city council, Alice Rayner, says the state of some of the properties they see are a health risk.

“Sleeping eight hours in a room like this breathing in the spores and moisture is extremely worrying,” she said.

“It’s just horrendous that this is what people are having to live in, day in and day out, especially when there are young children.”

The scheme has come under criticism from some who say it penalises responsible landlords.

A spokesperson from the National Residential Landlords Association (NRLA) said: “Licensing schemes can be costly and can also act as a tax on good landlords who maintain their properties and look out for their tenants.

“When it comes to addressing the minority of rogue and criminal landlords in the private rental market, we need more robust enforcement of existing regulations.”

Peterborough’s housing compliance manager, Jonathan Hodgson, said licensing helps them tackle problem homes.

“We have been asked to make sure we’re clamping down on these poorer landlords. By having additional resources and time to inspect properties we can identify a lot if these issues and take action to remove them from the sector,” he added.

The UK’s largest mortgage lender, part of Lloyds Banking Group, said property values were up 1.3% compared with October – the fifth consecutive monthly rise.

The average house price hit the latest record high of £298,083 last month, surpassing a peak of £293,999 in October.

On an annual basis, house prices have now seen the fastest growth for the past two years.

Halifax said house prices increased by 4.8% in November compared with a year earlier, up from 4% growth in October. That was the strongest annual growth for two years, echoing the view of rival lender, the Nationwide, earlier in the week.

This reflects demand from buyers, but also the relative weakness of the market a year ago.

“Latest figures continue to show improving levels of demand for mortgages, as an easing in mortgage rates boost buyer confidence,” said Amanda Bryden, head of mortgages at Halifax.

She said that stronger employment, as well as falling interest rates, would be expected to bring further house price rises for the rest of this year and into next year.

“However, many potential buyers and movers still face significant affordability challenges and buyer confidence may be tested against a changeable economic backdrop,” she added.

Jonathan Hopper, chief executive of Garrington Property Finders, said: “Hesitation has turned to hurry in some parts of the market, especially among first-time buyers racing to complete their purchases before the stamp duty thresholds change at the end of March.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, also thinks the rise is linked to stamp duty concerns.

“It means property prices are likely to rise in the run-up to the deadline as buyers and sellers race to beat the tax hike. Beyond the start of April, the market is likely to be more muted as buyers choose to purchase cheaper homes,” she said.

London remains the most expensive place in the UK to buy a house, with the average property there costing £545,439, according to the Halifax.

Northern Ireland continues to record the strongest house price growth in the UK, with an average price of £203,131.

In England, the North West region continued to see the strongest growth, increasing by 5.9% compared to last year. An average property there now costs £237,045.House prices were up 5.5% on last year in the West Midlands, with an average home costing £257,982.

Halifax said Scotland saw a modest rise in house prices with the average property now costing £208,957, which is 2.8% more than the year before.

Halifax’s house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.