A south London-based letting agency took £5.5million in housing benefit from a charity which housed the homeless in what campaigners have described as a "worrying" arrangement.
Investing Solutions, which operates across seven London boroughs, received the cash over a two year period from a charity called Fresh Start Housing, which finds properties for single homeless men.
The company, based in York Road, Battersea, has been earning a £11,568 profit per year from one property alone, according to an investigation by the BBC.
Neither the company nor the charity have broken the law with the arrangement, but campaigners have described the practice as "exploitation".
A BBC investigation found evidence of some Investing Solutions properties being sub-standard, with problems including damp and rat infestations.
Candida Jones, a Labour councillor at Wandsworth Council, 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."
She continued: “I can’t understand why alarm bells were not ringing at Wandsworth Council. They are flat-footed when it comes to investigating local landlords.”
A spokeswoman for housing charity Crisis said longer-term tenancies and a mandatory register for landlords would help to protect tenants.
She said: "Too often, people who are risk of homelessness are in a terrible situation.
"It is evident the people at the lower end of the market are so vulnerable. We know that private companies are exploiting people - it is worrying.
"In a market where demand has grown so much it is unsurprising that this sort of thing is happening."
Samir Patel, the company's director, denied there was a link between Investing Solutions and charity Fresh Start Housing.
He would not confirm or deny that £5.5million was paid to his company over a two year period but said the figure was "probably accurate".
He said: "We lease properties from landlords. We house homeless people in need. We do not charge them any fees.
He added: "These clients are in desperate need of housing. I could rent to working people and get more money but we think of this as a win-win situation because the homeless are getting homes.
"If the council could house them then there would not be a demand for our homes."
MORE ABOUT