The Humber Landlords Association took the council to the High Court over the introduction of a new private housing enforcement policy.
The HLA had claimed the council was going against clear Government guidance by abandoning informal action and going ahead with formal action, even in the case of minor defects.
It's a move they say could cost them hundreds of pounds and potentially cause problems with mortgage lenders.
But the High Court has ruled that the council is within its rights to implement the policy .
The decision also requires the HLA to pay the council’s legal costs of defending the claim.
Hull Council city manager for neighbourhoods and housing Dave Richmond said the HLA had made "misleading" claims and landlords could still avoid charges if they acted promptly.
He cited a case of a 92-year-old woman in a freezing cold house off Holderness Road with only a single gas fire.
The developer had failed to act for two months to improve the heating and deal with a trip hazard - but in the meantime had built a garage on the house.
He said: "What Hull has is a legacy of Victorian terraces - two up two down - and in a very poor standard.
"Some are doing fantastic conversions, but equally others are investing the bare minimum, homes that are not fit for 2019."
He said the HLA had accused them of wasting taxpayers money, but today's ruling meant the HLA would have to pick up their costs.
"I would urge them to work with us and try and raise standards in the city," he said.
Chairman of the HLA Danny Gough said they would be applying to the Court of Appeal to appeal the decision.
He claims the new policy is an "easy way" for the council to raise money as officers will be able to charge around £250 just for the first visit.
Mr Gough said the move could have severe consequences for landlords as mortgage lenders on seeing a formal notice could decide to withdraw their financial backing.
"We are preparing paperwork to go to the Court of Appeal," he said.
""I agree every landlord has a duty to protect the tenant, but it makes every landlord look like they are guilty and having to prove their innocence."
The HLA is being supported by the Residential Landlords Association and the National Landlords Association.