Landlords of house shares in Salford could be fined or forced to repay rent if their three and four person properties are not licensed under a new scheme.
Larger homes of five people or more already require licences in the city.
But from July, houses in multiple occupation (HMOs) which accommodate three or four tenants will also need to be licensed everywhere in Salford.
It comes as the council clamps down on housing standards in smaller HMOs after 90 pc of those inspected in the last year fell below required standards.
An HMO is a home in which at least three tenants live and are not all part of the same family, but share toilet, bathroom or kitchen facilities with each other.
Over a third of the properties checked were damp or suffering from mould due to leaky roofs or walls and a third had inadequate heating or no heating at all.
In a bid to drive up standards, Seedley and Langworthy became the first areas in the country where special licences for some HMOs were required in 2007.
Now, Salford council wants to introduce mandatory licensing for smaller HMOs across the whole city with a five-year scheme coming into force from July 19.
This means landlords of HMOs who do not already hold a licence will have three months to register or face a fine and the threat of a civil penalty notice.
The council also has the power to order the landlord to repay rent to the tenants and take over management arrangements for their properties.
Labour councillor Sharmina August, who represents Eccles where there has been a 460 pc rise in HMO conversions of all sizes in the last five years, welcomed the move which she said would protect people in the city.
She said: "As most people in my generation, I have lived in HMOs.
"As the housing crisis goes on, it's the only sort of options a lot of people have. They can't afford their own flats and houses.
"They have to get into house shares with their friends – or sometimes not even friends, they just find a room available for somewhere that they can simply afford to live in and feed themselves at the same time.
"Often we're prey to bad landlords and awful living conditions."
Fellow Eccles councillor Mike McCusker said the scheme is in the best interest of tenants, of the communities around HMOs and of the landlords themselves.
It comes after a public consultation in which 34 pc of landlords and 81 pc of residents who responded supported the additional HMO licensing scheme.
Salford council officer John Woodison presented the proposals to councillors on the cabinet who approved the proposals at a meeting on Tuesday (April 13).
He said: "The city council accepts that there is a level of need for HMO-type properties in the city, for a wide range of reasons – for people they can be the appropriate housing solution in their circumstances.
"But we need to make sure that those properties are effectively managed, that the impact of those properties on their local communities are managed and that the safety and the wellbeing of the residents is managed as well."
The licence will cost up to £1,085, but this can be paid in instalments and landlords who make early and accurate applications will pay less in total.
Council officers say the scheme is designed to be 'self-funding', with the fees covering all costs of additional administrative work for local authority staff.
The council has also calculated the potential increase in rent for tenants.
In the worst case scenario, a five-year HMO licence application for a four-bedroom property would cost the landlord an additional £4.17 per week.
If split between four tenants, this equates to around £1.04 each per week.
To obtain a licence, landlords and property managers will need to demonstrate they are a ‘fit and proper person’ to let the property and that they have suitable management arrangements in place including annual safety checks.
They will also have to make sure that tenants have bins and know how to properly recycle and dispose of waste appropriately.
The licence will also determine the maximum number of occupants to make sure tenants are not living in cramped and overcrowded properties.
If a landlord fails to licence the property or breaches its conditions and fails to fix the situation, the council can issue civil penalty notices or prosecute them.
Council officers will now begin contacting landlords and managing agents already on their records and information will be posted on the council website.