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Following the eviction of over 200 tenants, a Labour-run council is being sued in the High Court.
The deadline for Lambeth Council to address claims that it violated the law by renting out 160 residences in five of the borough's complexes privately is February 5.
In an effort to shorten its municipal waiting lists, the local government sent Section 21 eviction warnings to hundreds of private tenants last year.
Attorneys demanded an immediate stop to the evictions, claiming that renters had experienced a "devastating impact.
"The renter at the center of the lawsuit has been residing on the Central Hill estate owned by Lambeth Council for the last five years, together with their spouse and two small children.
The family have to vacate the property by August and fear this will mean relocating, changing jobs and moving their children to a different school.
Lambeth Council had been letting out around 160 homes at market rates for almost 10 years under its private company, Homes for Lambeth Living.
However, it last year reclassified the properties as “council homes” after the number of homeless families living in “unsuitable and expensive” temporary accommodation hit 4,700.
The council served 200 residents with Section 21 notices, known as no-fault evictions, citing the £28m-a-year cost of housing families in temporary hotels and bedsits.
Legal documents allege the council broke the 2011 Localism Act by using Homes for Lambeth Living to rent houses privately and grant assured shorthold tenancies that local authorities cannot legally issue.
They also claim the local authority breached the 1985 Housing Act by failing to categorise the resident as a secure tenant.
Speaking anonymously to The Telegraph, the resident leading the case, said: “It didn’t seem right to me for the council to do this and make us homeless and house other people who are homeless. We are going to be homeless.
“It’s very stressful, terrifying. We cannot find any affordable rent in the area where the children are at school. It’s stressful for the kids as well. It’ll be a life change.
“My husband has depression and anxiety ,which gets worse every time I mention this.”
Alexandra Goldenberg, of Public Interest Law Centre, which represents the claimant, said: “Lambeth’s decision to rent these properties on the private market is unlawful and has created a devastating impact on hundreds of residents across the borough who have been evicted or are facing eviction.
“This is yet another chapter in a troubling history of estate ‘regeneration’ schemes that have disregarded the rights of residents and communities.
“It is time for Lambeth to take responsibility and do the right thing, starting with an immediate halt to all evictions”.
Section 21 notices had already reached an eight-year high last year as landlords rushed through evictions ahead of Labour’s plans to ban them from this summer.
Campaigners said many of the private renters being made homeless would have to seek housing from the same council that was evicting them.
Ian Jeffery, of the Law Society, said: “A judicial review is a way for people to assert their fundamental rights, test the lawfulness of decisions made by public bodies and seek a remedy when things go wrong.
“Judicial review allows individuals, businesses and organisations to challenge a public body’s action, inaction or decision. It’s used to test whether a public body has acted within its powers and followed a proper procedure.”
When approached for comment, a Lambeth Council spokesman said it rejected the claims and had written to the claimant explaining why.
“The homes were rented out by Homes for Lambeth Living, a private provider which is not the council, through a letting agent at market rent and without any needs assessment, which would be the case for any social housing.
“We have approaching 5,000 homeless households from Lambeth in often poor quality temporary housing. Having now decided to take over Homes for Lambeth properties, we intend to use these properties to house families in most desperate need.”
Lambeth Council has 63 councillors, of which 58 are Labour representatives. It announced a four-year, £70m budget deficit last September, which it blamed on spiralling costs for temporary accommodation.
