You know, this is story is -- is, uh, a little, uh,
close to my heart
because I've been there.
Growing up in the projects, you know, I --
I've definitely seen my fair share of desperate times.
You know, and there's always been
some level of criminal activity.
This is about 40 grams worth of cannabis here.
I was about, what, 18, 19 years old on drugs.
I let a dealer come into my space
and occupy my apartment.
Some things definitely happened that I...
...you know, that I can't take back.
Man: It's a lot of risk as well for you.
As Jake Hanrahan finds out,
those council flats in London,
they're a breeding ground for the black market.
Our goal is just to simply show the world a window
as to why people do the things they do
and where that desperation comes from.
It's like they say, "When the system fails you,
you create your own system."
Hanrahan: All right.
I'm with a scam artist who says he's found a place
to run his black market business with little overhead.
London real estate is skyrocketing.
Over the past year,
housing prices have risen 800% faster
than people's income,
which means if you're not rich you're struggling
to find an affordable place to live.
Public housing areas, known as council estates,
offer places to live for people
who can't afford the inflated prices in the city.
Rent can't be as little as a quarter of the market price.
Many illicit activities are being run out
of these subsidized properties.
And criminals have figured out
that they can set up their businesses
in council estates to both save and make money.
[ Cellphone rings ]
This is Butch.
He agreed to talk if we hid his identity.
Butch has scammed his way into a temporary shelter
for at-risk homeless people
by pretending to be suicidal.
So, Butch, can you just explain to me
exactly what it is you're doing here with this --
this hostel property.
[ Cellphone ringing ]
Hello?
Hanrahan: Butch and his partner claim to be in possession
of stolen credit cards.
They order luxury items to the homeless shelter.
But Butch has bigger aspirations
and feels he needs a council flat of his own.
How'd you get ahold of forging credit cards?
So what's the end goal? I mean, you're forging
and trying to get ahold of a council flat.
Well, what is the back door? What's the method?
I mean, there's a lot of homeless people.
Why don't -- why doesn't everyone do this?
Why do you want it?
Well, I mean, it's...
I mean, do you feel bad at all that there are people
that are waiting in hostels like this who can't get property?
You wouldn't feel bad? Why not?
At least you're honest. That's something.
Hanrahan: It's not easy for authorities to keep
track of illegal activity on a council estate,
partly because there are so many of them.
There are half a million units spread throughout London.
There's a reasonable amount of oversight of council flats.
But one of the challenges is there are
so many council flats.
I mean, these are high-rise blocks
with thousands of people living in them.
Hanrahan: One black market trade thriving
in the council estates of London is sex work.
So we're on a High Street in London, and in this area
there's been a big influx
of what is essentially single-occupancy brothels.
'Cause no longer are the red light districts and the brothels
and massage parlors run in the city
as they used to be because the people running it,
it's expensive and can be easily found out by the police.
Now it's all that you have these operations
going on the council flats right next door to families.
And the sex trade here is so readily available
that you can nip down to the corner shop
to get your bread, to get your milk
and now also pick up what is essentially
a calling card for a prostitute in the area.
We're gonna go and try and find out the process
from calling card,
to the women that are in these situations
and who's running it.
We spoke to a guy who specializes
in driving punters to visit sex workers.
His underground networks are effectively his workplace.
Councils up and down the country have subsidized
the sex industry.
You know, they're -- they're good places
to do business where they feel safe.
And if there's no noise and, on the face of it,
anything strange happening, it's under the radar.
I'm going undercover to find out firsthand why so many women
are using government-owned properties for sex work.
I'm in London, where sex workers
are operating out of government-subsidized housing.
-Hello? -Hi.
Um, I saw a card in a shop window
with your, uh, your number on it.
Um, I'm just wondering, like, is there any way
I could maybe pop 'round or book an appointment or something?
-Yes. -Okay. And, what, are you free now?
Are you free in, like, within the next 30 minutes?
-Yeah. -Okay.
Okay. Bye.
Easy as that.
We're going to film undercover to see how her operation works,
concealing her face and location to protect her identity.
Oh, okay.
What -- study what?
Even with a job and below-market rent,
this woman needs to pull in extra money from sex work.
Before things went any further, I made my excuses and left.
Nice, very pretty, young girl.
Um, she said,
"Yeah, most of the time, I'd rather do hairdressing,
but sometimes I do this."
She looked so sad, mate. I saw it in her face.
Like, she just looked sad.
Her brother has got the lease on the council flat.
Um, and he knows what she's up to basically.
Prostitution isn't the only black market activity
being run out of these government-owned properties.
I met up with James.
He runs a scam involving diesel fuel conversion
out of the back garden of his council flat.
By passing the fuel through cat litter,
the red dye is removed.
Now clear, the diesel can be sold
as untaxed regular diesel.
This is just one of James' scams.
He also sublets rooms in dozens of flats
all over the city,
including a basement laundry room
that he turned into a grow farm.
Your little babies, eh? -Yeah.
So, can you just explain to me the operation
you've got going on here?
And how much money do you reckon you make from that?
This is about £40,000 worth of cannabis here?
Tell me about this place.
I mean, what kind of house is this?
Really?
Mm.
How'd you end up with dozens of council houses?
-So does a family live here? -Yeah.
And she just doesn't come down?
Hanrahan: He claims to pay tenants up to $15,000 per grow,
which means, if he's telling the truth,
this woman would make up to $60,000 a year
for renting out her laundry room.
So I guess, in a way, I mean --
I mean, do you feel like you're helping them?
[ Laughs ]
-Just like him. -Yeah.
[ Laughter ]
It sounds like everyone makes a lot of money from this deal.
But as we find out, these promises
are rarely what they seem.
Hanrahan: The U.K. has built a vast surveillance system
that monitors public space all over the country.
There's one security camera for every 11 people.
Densley: In the -- the center of London the cameras
are sort of everywhere because it's retail
and it's, uh, business.
But a council estate is residential.
And so what you often find is the cameras
are really only in communal spaces.
So individuals who live on those council estates,
they know where the cameras are and can sometimes bypass them.
And in some cases, um,
gang members will actually break the cameras
deliberately, uh,
to ensure that they cannot be followed by them.
Hanrahan: I met with a former drug squad detective
who used to cover this area.
When I first arrived, I bugged my skipper,
my sergeant,
to let me go out in plain clothes at least once a week.
And I promised him I'd -- I'd come back with a --
with a villain.
So, uh, I'd come to an area like this...
Mm-hmm.
...and see what was going on.
-Right. -Follow my nose.
And what was going on?
Well, literally, I'd follow my nose.
So if I smelled cannabis, would be a good...
Oh, so literally follow your nose.
-Sometimes. -Yeah.
But it'd be an opportunity to see if --
if there's a little bit of suspicious activity going on.
Mm-hmm.
The houses and the flats,
they're all quite close together.
There's lots of communal hallways, et cetera.
They're probably originally designed to encourage community,
but the geography of -- of council housing estates
like this makes it really difficult to police.
And police aren't massively loved.
So they'll share information such as,
"Be aware that the coppers are around."
So, if there are people about,
and they're working, they'll find out about us
and our presence here pretty quickly.
You've said that they have people here, people there.
They move around.
They get out of the area quickly.
How do you police that? It sounds, you know, quite hard.
It's very hard to -- to find that property.
Sometimes it'll be a vulnerable person's property that --
that they're exploiting. Mm-hmm.
Criminals might come to a known drug user,
maybe one of their customers,
and see if they can start spending time in their flat.
Yeah. Before you know it they take over.
And -- and that vulnerable person's
almost imprisoned in their own property.
Hanrahan: Criminals generally aim to work out of flats
that are owned by people with no criminal records.
These flats receive little attention
from the authorities.
I met with a single mother
who previously had no criminal record.
And how long have you had this flat?
Seven years. And you got it why?
Because...
They wanted to use her kitchen
to cook and package crack cocaine.
It's not a lot, though, really.
Can you explain to me the setup here?
Like, what's the situation in this flat?
So, like, you're saying they're almost, like,
a gang, a drugs gang. Yeah.
And how much money
do you reckon they make around here?
Over £10,000 a day? Yeah.
Really?
Do they hurt you, like, physically?
Mm.
This is a council flat for families.
What do you think to that when there are people,
you know, living in hostels who can't get a place
and then, you have a flat?
Yeah. Yeah?
It's a lot of risk as well for you.
Do you not worry about that?
Hanrahan: Once a gang takes over a flat,
the occupant often has no one to turn to for help.
These criminals then essentially
have full control of the property.
Hanrahan: In London, housing designated for low-income families
often plays host to criminal activity.
Some vulnerable residents,
often seeking to appease local gangs,
make the mistake of allowing them into their homes,
only to find themselves at the mercy
of their operations.
I went to meet a woman who'd fallen into this trap.
It started when she couldn't afford
to pay back her weed dealer.
She let him set up a grow farm in the living room
with full lighting and ventilation systems.
He promised free weed plus cash when the grow was finished.
-They kind of just took over. -Took over how?
-He was just my weed dealer. -Okay.
And -- and I don't know.
I think they caught me off guard one day.
And I was just like, "Come to the flat."
I knew money was short.
So, like I say, I invited him in,
like an idiot, you know, and -- and gave him the flat.
Um, they got keys.
I kind of didn't have a say what went on in the flat.
-They had keys to this flat? -Yeah.
They've still got them. -They've still got them?
They've still got them.
I never had anything to do with what went on in this room.
I didn't even have a key to let myself in.
So, it was kind of their little setup in this room, you know?
There was always five or six guys that came up, um,
and dealt with it theirselves.
That's the plugs they were using.
Um, yeah. They put the vents and the doors.
The lights were hanging from these hooks up here.
There's a fan there, as well, that they was using.
It seems like they knew what they were doing.
This was this first proper big grow.
Okay. I mean, they've done it before, um, amateur-wise.
But, I mean, they put plastic bags up at the windows.
So that straight away is knowing that they're amateur.
Because you wouldn't do that. Even I know that.
Really obvious on the outside, right? Yeah.
How much they promise you?
To start off with, it was 5,000.
Um, and then, obviously, as the grow went on,
it kind of dropped to 3,000.
And that was when I kind of knew
that I was gonna get nothing from him.
Because if we have an agreement in the first place,
why are you gonna, do you know what I mean,
try and bump me down? They tried manipulating me.
After a few months hosting the grow farm,
her neighbors complained about the smell.
The police raided her apartment, but no one was in at the time.
As the legal tenant of the apartment,
she was the only person who was arrested.
And now she's waiting to hear if she's going to be evicted
from her council flat.
It -- it messed me up mentally and physically.
They're looking out for themselves.
They're not looking out for anybody else.
They're just --
they're finding ways of getting money
for theirselves and sod everybody else in the process,
you know?
I mean, it was only ever drugs and --
that they really helped me with.
And that wasn't really helping me, was it really?
Of course.
I guess I was an easy target for 'em.
And I've got myself a criminal record for it, you know?
I've not seen the guy since. I mean, they --
they target people that are vulnerable.
This is what they do. It's always the same situation.
It's always alone woman, you know, always on their --
on their asses, like, you know, got nothing.
This was my home, you know?
I know I haven't got a lot, but it was my home.
And I cherished everything that I had in here,
secondhand or not, you know.
Now I don't even wanna be here. It's just, I walk in,
and I'm -- I'm shaky. I'm nervous.
I get the sweats from my anxiety.
It's just, if I get evicted now,
I'm -- I'm now gonna be homeless.
We asked the local council authorities for comment
on what we'd found,
but they didn't get back to us.
Britain's housing crisis has helped drive
the number of homeless people to over 1/4 million.
At the same time, luxury real estate
has become so popular
that a penthouse in central London
just sold for $220 million.
The result has crippled the working class
with one in 10 Londoners currently
on a waiting list for council housing.
As inequality continues to grow,
criminals continue to feed off of it,
turning to affordable homes for their illicit activity.