Businessman David Dahan, 65, of Hillchrest Gardens, Finchley, was last month ordered to pay the London Borough of Barnet £75,636. He pleaded guilty to two planning breaches after splitting two houses into flats without planning permission.
In a statement, the council said that, following an investigation by its corporate anti-fraud team officers, it was discovered that Dahan was receiving an income of £5,000 per month from renting out the unlawful properties in Cricklewood and Golders Green.
The borough's anti-fraud team had applied for a confiscation order under the Proceeds of Crime Act (2002) before Harrow Crown Court.
Clair Green, operational assurance assistant director in Barnet Council's corporate anti-fraud team, said the team had a close working relationship with the authority's planning enforcement officers, who, she explained, understood the requirements of the legislation.
Green said that, towards the end of planning enforcement investigations, the corporate anti-fraud team would hold case conferences with the planning enforcement team in order to make an assessment as to whether a Proceeds of Crime Act confiscation order would be appropriate.
According to Tim Taylor, head of planning at law firm Forsters, the case is the latest in a growing number of examples of local planning authorities using the Act to tackle unauthorised activities.
Taylor said that the Act had initially been intended to seize the proceeds of "big scale criminal activity". But he added that those operating in breach of planning rules for a period of at least six months could be deemed to have a criminal lifestyle and be "lumped in" with money launderers and drug traffickers.
A landmark 2010 Court of Appeal ruling established the principle that the legislation could be used in planning enforcement cases (see panel above).
Izindi Visagie, founder of law firm Ivy Legal, said confiscation orders can "provide a real source of revenue for planning enforcement teams ... in the context of budget cuts".
She added: "The key benefit of a confiscation order is that not only does a planning offender forfeit the gains from his/her planning crime, but the local authority pockets up to 37.5 per cent of the gain."
But Taylor questioned whether an act "that clearly wasn't created for regulatory breaches" should be used to confiscate money in planning enforcement cases. "If Parliament had intended that to be the case, would it not have made provision for that in the Planning Act?" he said.
HOW LANDMARK 2010 CASE ESTABLISHED PRINCIPLE
The principle that the Proceeds of Crime Act could be used in planning enforcement cases was established in 2010, when the Court of Appeal confirmed a confiscation order requiring an Essex businessman to hand over £760,000 for flouting planning rules.
Luigi Del Basso, along with his business partner Bradley Goodwin, was the operator of an unauthorised park-and-ride scheme used by customers of Stansted Airport. They were adjudged to have received a benefit of nearly £1.9 million while operating in contravention of the enforcement notice requiring the use to cease. Del Basso was ordered to pay £760,000, a sum deemed to be the value of his realisable assets. A nominal order was made against Goodwin, who was by then bankrupt.
The trial judge said: "Those who choose to run operations in disregard of planning enforcement requirements are at risk of having the gross receipts of their illegal businesses confiscated. In this respect they are in the same position as thieves, fraudsters and drug dealers."