Up to eight people were housed in “appalling” conditions in a property that had been illegally converted into flats, Lambeth Council has discovered.

The council said the house could have made its landlord an estimated £40,000 a year in rent - this from a property in such bad condition that one room had a branch from a nearby tree growing into it.

When council officers took back possession of the house, they found occupants had been using electricity from a cable passed through a hole drilled in the branch.

The building had been converted from a three-bedroom home to a House in Multiple Occupation (HMO), with eight rooms. The council said the house did not have clear and suitable emergency exits. All eight occupants had to share a single bath and toilet.

The bath shared between eight occupants of the house in Rectory Garden Credit: Lambeth Council

The property in Rectory Gardens in Clapham belongs to Lambeth Council but it had not been run by the council for many years.

The terraced house was a “shortlife” property, one of 1,200 licensed to housing associations and cooperatives on a short-term basis in the 1970s, on the understanding that they would be returned to the council.

One of the rooms at the converted property Credit: Lambeth Council

A spokesman for the council said this type of arrangement had been made in relation to properties it didn't want to sell, but didn't have the money to refurbish at the time. The plan had been to take the houses back when the money became available in future, but local councils had found they did not always have the money to do this.

Credit: Lambeth Council

Over the last five years, Lambeth Council has been taking back the 1,200 properties it owns, with around 40 now left to be reclaimed. It has used money from the sale of the reclaimed homes to fund new housing developments.

Another room at the house in Clapham Credit: Lambeth Council

"The conditions the people in this illegal HMO were living in were truly appalling, and represented a genuine danger to life and limb. It is shocking that someone can make money exploiting people by illegally renting out such dangerous accommodation with no regard for the safety of the people living there." Cllr Matthew Bennett, Cabinet member for Housing, Lambeth

Lambeth Council said it had 21,000 people currently on the housing waiting list, with 1,800 families in temporary accommodation and another 1,300 families living in overcrowded conditions.

It said it had been advised to sell any reclaimed "shortlife" properties, as they would cost £70,000 each to refurbish, whereas selling them would release money to build homes in areas where the council believed there was a particular need.

Cllr Bennett added that, given the need for housing in the area, "it would be irresponsible to spend our money refurbishing shortlife properties which are in a very poor state of disrepair – particularly when they are being misused for these exploitative and illegal purposes."

The council said it was considering legal action against the landlord.