A letting agency has been paid more than £5.5m in housing benefit after its owner set up a charity to help the homeless, the BBC reports.
Investing Solutions received those benefit payments over the past two years by finding properties for single homeless men.
The charity, Fresh Start Housing, finds clients from London homeless charities.
Both Investing Solutions and Fresh Start are based in the same building, a storage unit in south London.
Nearly half the money that Investing Solutions has received over the past two years has been paid by Wandsworth Council, which has paid the lettings agency more than £2.1m.
Operating across seven London boroughs, Investing Solutions is one of the largest recipients of housing benefit in the UK, making the venture hugely profitable.
In one property the BBC visited, Investing Solutions was claiming £2,114 per month in housing benefit for two tenants.
The owner of the house was getting £1,150 per month, giving the agency an annual gross profit of £11,568 on the one property.
Neither the charity nor the company act illegally, but a homeless group says the relationship is “a new low”.
Matt Downie, of homeless charity Crisis, said: “We’ve heard many examples of poor practice amongst letting agents as well as good practice. But this idea of having a charity tacked on to poor practice is a new low.”
Candida Jones, the Wandsworth Labour councillor whose work led to the investigation, said: “It is shocking that so much public money can be paid to house some of our most vulnerable people in filthy and dangerous conditions. In a properly regulated housing market exploitation of this kind could not have happened.
“I can’t understand why alarm bells were not ringing at Wandsworth Council. They are flat-footed when it comes to investigating local landlords.”
Rex Osborn, Wandsworth Labour leader, said: “This is a serious failing across Wandsworth’s housing and caring departments leading to huge spending errors. Who in Wandsworth’s Conservative administration will have the courage to take responsibility for this and have the decency to step down?”