The scheme is designed to ensure that properties are safe and being managed appropriately.
The decision followed extensive consultation about the scheme in 2018 with local residents, landlords and businesses.
The scheme will take effect from 1 June 2019 and will operate for a period of five years. Along with an existing scheme already in operation in the nearby area, the latest approval will take the number of privately rented homes covered by a scheme to approximately 2000.
The scheme will operate in areas where there are high concentrations of privately rented properties, of which a large number are in poor condition and poorly managed. Landlords of privately rented properties in these areas will need to apply for a licence from the council and then comply with a range of licensing conditions designed to tackle the existing problems.
The scheme will enable the council to employ extra staff to undertake inspections of these properties and work with landlords to ensure that all privately rented properties within the designated area meet appropriate standards.
Landlords with properties in the designated area that fail to apply for a licence, or do not comply with the licensing conditions, will be subject to prosecution. An unlimited fine may be imposed. In addition, breaking any of the licence conditions could result in fines of up to £5,000 per offence.
The council has issued a formal Public Notice for the introduction of the scheme, which along with a map of the area and list of streets that will be covered by the scheme, can be viewed at www.scarborough.gov.uk/home/housing/selective-licensing-scarborough-central
Cllr Bill Chatt, Scarborough Borough Council Cabinet Member for Housing and Public Health said: "I am pleased to see the introduction of the selective licensing scheme within parts of the Castle, Central and North Bay wards.
"I know that officers from our Residential Regulation Team are constantly dealing with properties in the area, which are simply not up to standard and in many cases unsafe.
"Selective Licensing will mean that tenants of privately rented properties in the area will know their home is safe and that their landlord will have to manage their property responsibly."