Tenants are paying to rent “sheds” – made of either timber or bricks and mortar – in people’s gardens.

The issue is raising concerns that an unregulated shadow housing market is risking people’s lives and exacerbating benefit fraud and illegal immigration.

The leader of Barnet’s Liberal Democrats, Cllr Jack Cohen, said: “Unscrupulous landlords are renting out sheds and other unsafe buildings in their gardens, normally to illegal immigrants who don’t know the law. People who are desperate will take anything.

“They are built as sheds to try to get round the planning laws. When you put people in them without building regulations, it’s a recipe for disaster.

“It’s a real problem in Barnet and it’s getting worse, not better.”

The issue has also been taken up by central government.

Two months ago, then housing minister Grant Shapps launched a national taskforce to deal with people living in “squalid, unsafe conditions”. He blamed rogue landlords seeking a quick profit.

Mr Shapps said the problem was fuelling illegal working and benefit fraud, and allocated �1.8million to the nine worst affected councils, including Brent, Ealing and Hillingdon, to deal with it.

London Fire Brigade (LFB) estimate that crews have attended 235 fires at buildings that should not have been inhabited in the last three years. A LFB spokesman said: “Beds in sheds are a growing problem across London.”

According to housing charity Shelter, the problem is being aggravated by a shortage of affordable accommodation.

Kay Boycott from Shelter said: “The combination of high demand for rental properties in London and high prices means that people on low incomes can get pushed right to the bottom of the housing market, which can include arrangements like ‘beds in sheds’.”

One couple affected by the issue are Trevor Morse and Memoria Lewis, of Woodstock Road, Golders Green. There is a brick shed allegedly being rented out illegally next door to their home.

The landlord has even created a separate entrance for the tenant to reach the shed which goes past the couple’s kitchen window.

Mr Morse said: “The man walks past our kitchen window on a regular basis, which is annoying as we don’t have any privacy.

“The house has been broken into bedsits, so there is a lot of rubbish which is a health hazard.”

Barnet Council said there had not been a significant increase in dwellings being illegally rented but could not provide statistics.

In Camden, the council reported less than 10 properties being illegally inhabited.

Haringey Council did not provide figures. But Cllr David Winskill, deputy chairman of its overview and scrutiny committee, said: “It has been a major issue in the east of the borough, where we have a substantial transient population who are being preyed upon by unscrupulous landlords.”