Brent Council in north London discovered three tenants living inside a shed in the garden of a three-bedroom semi-detached house in Dollis Hill during the early hours of yesterday morning.
The council's enforcement team raided the converted property shortly after 6am following tip-offs from neighbours.
They found 16 people crammed inside the unlicensed House in Multiple Occupation (HMO), including three tenants packed inside a shed in the back garden.
One family of four people informed officers that they were paying the landlord almost £200 a week to live in a single windowless room.
The tenants said that they had no written tenancy agreement from their landlord or any cash receipts for their rent payments.
The council estimates that the landlord is earning £68,400 a year through exploiting the people living in this property.
Cllr Eleanor Southwood, cabinet member for housing and welfare Reform, said: “The landlord of this property faces a hefty fine for breaking the licencing laws around houses in multiple occupation.”
The property also lacked a working fire alarm system, good maintenance and ventilation. Fly-tipping and the constant coming and going of different people from the property had led neighbours to complain to Brent Council's enforcement team.
Southwood added: “We will do everything in our power to protect vulnerable tenants from this kind of gross exploitation. Every renter in Brent deserves to live in a home that is safe and maintained to a decent standard.”