Problems with anti-social behaviour have arisen around high concentrations of HMOs, drawing complaints from locals about litter, noise and towns becoming empty during holidays.
With a new consultation, the Government is pressing ahead with measures to clear students out of residential areas. But immigrants, young professionals and others who rent HMOs will also be affected.
Property experts say that using planning laws to restrict HMOs will raise rents and drive out the students, young professionals and immigrants who rent them because they are affordable.
Local businesses, particularly those which rely on student custom, also face being hit if students are driven out.
The move is also a wholesale contradiction of social integration policies, which the Government has promoted to ensure that "sink estates" are not recreated.
The NUS has joined forces with property groups in condemning the plans as a "Nimby’s Charter" which would create student ghettos and dictate where people live based on their income.
The British Property Federation (BPF), National Landlords Association, Residential Landlords Association, and NUS all say the proposals will not help and that similar moves failed in Northern Ireland.
The property industry wants a local management option to tackle the problems without further legislation. This could take into account local circumstances and offer a cost-effective solution to the problem.
Liz Peace, chief executive of the BPF said: "You can’t use the planning system for social engineering or to tackle anti-social behaviour.
"Only a tiny fraction of places suffer from a high concentrations of HMOs and using a broad brush approach to deal with different issues relating to anti-social behaviour makes no sense. It’s vital that the property market is left flexible and we hope ministers will head our warnings and reconsider going down the legislative route."
Wes Streeting, president of the National Union of Students said: "Students live and work within their communities and contribute hugely to their local areas through charity work and campaigning on local issues, not to mention the massive boost they give to the local economy.
"These proposals would marginalise students by forcing them to pay private companies to live in large ghettos away from the rest of the community. This would do nothing to improve community cohesion."
Have your say on this story using the comment section below