Rules aimed at preventing illegal immigrants from renting properties are “discriminatory” and breach human rights laws, the High Court has ruled.
The “right to rent” scheme, which requires landlords to check the immigration status of tenants, was introduced in England in 2016.
Judges said it would be illegal to roll it out in Scotland, Wales and Northern Ireland without further evaluation.
The Home Office said it was “disappointed” by the ruling.
Mr Justice Spencer said the scheme had “little or no effect” on its main aim of controlling immigration and even if it had, this was “significantly outweighed by the discriminatory effect”.
He added that the evidence “strongly showed” the scheme was causing landlords to discriminate against potential tenants because of their nationality and ethnicity.
The scheme, the judge said in his ruling, appeared to be having a “real effect” on people’s ability to find accommodation and the MPs who voted for it “would be aghast” to see its consequences.
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The challenge was brought by the Joint Council for the Welfare of Immigrants (JCWI), which claimed the scheme was “race discrimination against those who are perfectly entitled to rent”.
Responding to the ruling, legal policy director Chai Patel said there was “no place for racism in the UK housing market”.
He added that the judgement “only reveals the tip of the iceberg” and called on Parliament to scrap the policy.
The Residential Landlords Association also welcomed the ruling and said the policy had turned landlords into “untrained and unwilling border police”.
The group said its research had found that fear of getting things wrong led to private landlords being less likely to rent to those without a British passport or those with limited time to remain in the UK.
The Home Office said an independent study found no evidence of systematic discrimination in its policy and the scheme was intended to discourage illegal residence in the UK.
It said it had been granted permission to appeal and was giving careful consideration to the judge’s comments.
