Landlords who let properties to more than three unrelated people need to apply for a licence for a House of Multiple Occupation (HMO).
But many are put off - because a licence can cost ??1,000 - despite facing a fine of up to ??20,000, Southampton City Council said.
The authority estimated a total of 1,500 unlicensed HMOs in the area.
Shelter helpline adviser Nadeem Khan said fear of eviction and living in poorly maintained properties are frequent concerns raised by HMO tenants.
"Because of the huge shortage of affordable homes people are being forced into rented homes which are unregulated. We receive about five or six calls a day about this," he said.
Nationally, mandatory licensing for HMOs is aimed at houses of three storeys or more and occupied by five or more unrelated people.
In Southampton, the licences affect properties in Bargate, Bevois, Portswood, Swaythling (Designation 1 - introduced in 2013) and in Shirley Freemantle, Millbrook, and Bassett (Designation 2 - introduced in 2015).
A council spokesman said: "Landlords have generally co-operated with the regime, but a small minority have resisted applying for their licence."
The council said it had so far gained prosecutions against one firm and 13 individuals.
Tenants in Southampton may face eviction because landlords are holding incorrect paperwork, Shelter claims.