‘HMOs are a state-financed cash machine for investors’

Matthew Desmond’s Pulitzer Prize winning book Evicted: Poverty and Profit in the American City tells the story of eight low-income families and their landlords. He argues that poverty is a billion-pound business. Slum landlords, trailer park owners, bailiffs, and storage companies are all getting rich on money paid to them by the poor themselves or the state on their behalf. They get rich by making the lives of the poor worse and perpetuating poverty. 

It is a chilling read, but it has helped me to understand what has happened in South Bermondsey, Southwark, where a group of investors are seeking to displace 182 long term tenants and convert their homes into super-profitable Houses of Multiple Occupation (HMOs). 

A brief history will help to explain why most of these tenants consider themselves to be social, rather than private, tenants and why what is happening to them is so shocking.

In the early 1990s, these 182 properties for rent were built as part of the larger redevelopment of an old railway yard, near the Old Kent Road. The larger development has a mix of freeholders, social and private tenants, the general purpose of the redevelopment was to provide options for local families at risk of being priced out of Bermondsey to remain in the area.

READ MORE: ‘Why ‘quick wins’ on housing will be key to Andy Burnham’s success’

The first landlord was Quality Street, whose rationale was to provide below market rent accommodation for people who twenty years previously would probably have benefitted from a council tenancy. However by the early 1990s councils were forced to stop building, and ‘right to buy’ was starting to reduce their housing stock. There was a gap in the market for private rented accommodation at rents below the inner-London average. There are still a handful of the original tenants living on the estate. 

The estate was transferred to Nationwide, who residents remember fondly as a provider of stable tenancies and good quality services. The estate was then transferred to Notting Hill Housing Association commercial arm (later renamed Folio) in 2011. 

During this period Southwark’s homeless prevention and advice service assisted people to get tenancies on the estate. Also, a number of authorities were discharging their statutory homelessness duties by taking lettings on the estate. Given that local councils support those most at risk, it is unsurprising that a number of tenants have disclosed to me that they have acute physical or mental health needs. 

Unbeknown to tenants the security they believed they had was blown apart by the sale of their homes by Folio, to a group of investors named BMR in October 2025. There were no assurances about the security of tenants or rent levels. 

Around the time of the sale, the South Bermondsey Labour team kicked into our council election stride, with intensive door knocking sessions. Initially, we saw shards of what was happening. Tenants were telling us about rumours of a sale; they were receiving phone calls telling them that they needed to sign a new tenancy agreement or leave; the estate had become rubbish strewn. Most visibly, skips were appearing across the estate and HMO conversions were clearly happening. We took our concern to Neil Coyle MP. 

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Neil and I had a virtual call with a director of the property management company employed by BMR, Freshview. Who told us that ‘his client’ had borrowed a lot of money to buy the estate, and that this had to be paid back by displacing existing tenants and converting their homes into HMOs or through refurbishment and then selling on. 

HMOs are a state-financed cash machine for investors. As the Home Office, councils and other organisations compete for temporary accommodation there are big profits to be made by the owners. In this case, all of the profit will be made by BMR; whilst the emotional cost is being borne by the residents, the cost of supporting potentially 182 homeless households will fall on Southwark Council, and there will also be extra costs for the health and education services.

The current position is that most residents have received a Section 13 notice informing them of huge unaffordable rent increases, that feel to the tenants who can’t afford them like de facto evictions. Fifty tenants have received Section 21 eviction notices; most of these eviction notices were served four hours before the law changed to give tenants greater protection on the 1st May. 

A fight back is happening. We called a public meeting attended by 130 worried residents. From this, a highly effective tenants association has emerged that is working with the council to coordinate a response. The latest news is that there is a temporary halt on Section 21 proceedings and rent rises. The official reason is to give the council extra time to carry out the huge task of undertaking homeless person assessment for this number of people. Unofficially the tenants’ campaign may be starting to bite.

This is very personal for me, I know most of the 182 households affected. As Labour looks to constrain the projected increase in welfare spending there is an important lesson to be learned. Our focus for reducing expenditure should be on excessive and dysfunction profit taking, allowing us to concentrate employment and welfare support on those who need it most.

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