Leafy streets blighted as landlords clobbered by Labour split family homes into ugly bedsits

By MARK HOOKHAM, ASSISTANT EDITOR (INVESTIGATIONS) and ELIZABETH IVENS and GRAEME CULLIFORD Published: 22:01, 11 July 2026 | Updated: 22:15, 11 July 2026 A short walk from the All England Club that will host today's Wimbledon men's final, the Victorian terraced properties of Elsenham Street are stunning family homes in the heart of one of London's leafiest enclaves. But in recent months residents in this affluent corner of south-west London have found themselves locked in a battle over a three-bedroom property on the street that was snapped up by developers for £1.3 million and then converted into six separate bedsits. Neighbours fear it is a 'Trojan Horse' project, opening the door to an influx of more bedsits. A Mail on Sunday investigation reveals that the development is part of an explosion of similar Houses in Multiple Occupation (HMO) across Britain. Experts warn that Labour's tax increases and controversial rental reforms are forcing thousands of private landlords to 'slice and dice' traditional family homes into 'house shares' to protect their rental profits. Rachel Reeves hiked the stamp duty surcharge on additional homes to 5 per cent last year – forcing landlords to pay thousands more when they buy additional properties.  Labour is also fuelling demand for bedsits by shifting thousands of asylum seekers out of costly hotels and into HMOs, which are properties rented to at least three unrelated people. Meanwhile, the Renters' Rights Act abolishes fixed-term contracts, allowing tenants to leave with two months' notice.  Charles Runcie, chairman of the residents association at the HMO property on Elsenham Street Pictured: the ringer at the HMO property on Elsenham Street in Southfields near Wimbledon This means landlords can suddenly lose their rental income and must pay mortgage and council tax until they find a new tenant. It also gives tenants more power to challenge rent increases, which is pushing landlords to find new ways to increase the money they make from their properties. In Elsenham Street, a property which could previously have been rented to one family for between £3,000 and £5,000 a month could now earn up to £9,300 a month by renting out six separate rooms to young professionals. In less affluent areas, up to 300,000 landlords are considering housing asylum seekers or vulnerable people, including those with drug addiction or mental health problems, by signing deals with local authorities, charities or companies like Serco, it was claimed this weekend. Campaigners complain that, as well as the loss of much-needed family homes, the surging number of HMOs in 'Bedsit Britain' is destroying local communities and fuelling complaints of a lack of parking, overflowing bins and a rotating cast of transient tenants on rolling contracts. A total of 159 furious residents objected when the owners of the home on Elsenham Street in Southfields submitted planning permission for an eight-bedroom HMO. Approval had already been granted for a six-bedroom house- share but, amid a storm of local objections, plans for eight bedsits were rejected last year.  Despite this, eight doorbells have been fitted by the front door. The owners, a couple who live in a £1.2m home nearby, are now appealing. Last year, Rachel Reeves, pictured, hiked the stamp duty surcharge on additional homes Sir James Cleverly, pictured on Sunday with Laura Kuenssberg, said Labour taxes are causing an increase in HMOs Charles Runcie, chairman of the residents' association, told the MoS: 'This development is a Trojan horse and we believe it is the first of many targeting big family homes which are at a premium in this area.  'The pressure on local services is immense – these HMOs may bring more cars and they use more water and electricity. 'The nature of an HMO like this also means people come and go, and we don't know who they are and that is an unsettling influence in the community.' Property experts say that, amid increasing taxes and regulations, private landlords can make up to four times more money by converting family homes into HMOs. All landlords letting a property to five or more occupants from one or more households have to apply for a large HMO licence. Freedom of Information data from more than 220 councils found that 57,725 HMO applications were lodged in 2024, up from 41,162 in 2018. But this is the tip of the iceberg because in many areas houses can be converted into smaller HMOs without requiring planning permission or a licence, which means councils often have no idea how many HMOs there are. In Banbury, Oxfordshire, residents have launched a petition calling on local politicians to protect the town's streets 'from the unchecked conversion of small family homes into high-density HMOs'.  The campaign was sparked by plans to convert a small, three-bedroom house in Queen's Road – part of Banbury's conservation area where house prices average £360,000 – into a six-bedroom HMO. In Guildford, Surrey, residents complain that about 70 per cent of homes in some streets in the Park Barn and Stoughton neighbourhoods have been converted into HMOs.  Developers are coining it in because of huge demand in the leafy town for bedsits from students and NHS workers.  Howard Smith, a Labour councillor, said: 'Families are not moving in any more because as soon as one of these properties become available, landlords can out-bid people, snap them up, do a conversion and rent them out. 'Some landlords have got a dozen or more properties and it's a huge problem here.' Chris Norris, chief policy officer of the National Residential Landlords Association, estimates that up to 10 per cent of the UK's three million landlords are looking to secure deals in which they lease their properties to councils, charities, care providers or firms like Serco, which house asylum seekers on behalf of the Home Office. Of the estimated 900 HMOs in Wigan, about 160 are thought to house single male asylum seekers. Jack Townsend, a HMO boss dubbed the 'King of the Midlands' said: 'I have a Serco property and the incentives the Government are giving you are insane. 'You can buy a mid-terrace house, say three bedrooms, turn the downstairs dining room and living room into bedrooms and turn it into a five-bedroom HMO. 'I've got one four-bedroom property. The rent could have been £750, but through Serco the Home Office is paying £1,500.' Landlord Jim Halibuton, who manages 140 HMOs with more than 1,000 tenants, admitted he would not want to live next door to one, adding: 'I'm very sensitive where I put a new HMO because I've had so much c**p in the past.' A Government spokesman said: 'Councils already have powers to limit the number of HMOs in their area, and we are looking at tougher rules to give local leaders more control over them.' Sir James Cleverly, Tory shadow housing secretary, said: 'The number of HMOs is rising because of Labour's taxes and red tape that have made letting family homes less viable and pushed landlords into the HMO market. 'Demand is rising too because of soaring rents and Labour's failure to deliver new homes. Labour are also moving asylum seekers into HMOs, adding further pressure.'