Inadequate exempt accommodation regulations led to a murderer being mistaken for a victim, MPs heard as they called for laws to be "toughened up".
Carers or support staff are meant to be on hand to help residents within this style of housing, but this is not always the case.
Instead, Shadow Housing Secretary Lisa Nandy said "these shameless profiteers are leaving vulnerable people languishing in disgusting, unsafe housing".
“People who badly need our help are denied it," she added.
Statistics from Crisis showed 153,701 households in Britain were housed in exempt accommodation as of May 2021, an increase of 62% since 2016.
As the sector has grown, it's become more common for women who have been attacked to be housed with dangerous men within homes that are "unfit for human habitation", Ms Nandy told MPs.
Exempt accommodation is shared housing that is not funded or commissioned by local authority or social care funding.
It is often used as accommodation for people with very few other housing options, including domestic abuse victims, rough sleepers, asylum seekers, prison leavers and those experiencing substance abuse issues.
"In one shocking incident a key worker visited a property where the tenant had just been murdered," Ms Nandy told MPs.
"[The key worker mistook] the murder for the victim and told her mother she was fine. She was dead."
Labour MP Jess Phillips said a 19-year-old rape victim is “living with people who are perpetrators of violence against women”.
“She locks herself in her room every night. She’s frightened to live there. And that’s where she has been placed," she told MPs.
“I would never let one of my children live in these places, ever. And so I have to fight for everybody’s children to not have to live in these places. It’s totally unacceptable what is happening.”
Labour MP Preet Kaur Gill said one of the last campaigns she had run with former Birmingham Erdington MP Jack Dromey before his death was to tackle the growth on exempt accommodation and said the issue needed to be addressed “for his sake”.
“Sorting out the scandal of exempt accommodation was the kind of campaign he lived and breathed”, she added.
Minister for rough sleeping and housing Eddie Hughes said: “If we want to tackle the problems that plague this sector then the way to do it is through considered and meaningful reforms.”
He added: “Now personally I would say that there are a considerable number of powers that councils already have and this is not for me to disagree with members opposite with regard to what powers are required, I’m just saying personally I’d like to see the powers that currently exist used to the absolute max before we necessarily go reaching for others.”
It comes after a group of 40 housing bodies wrote to the Department of Housing, demanding ministers reform the "under-regulated" sector.
James Jamieson, chair of the Local Government Association, said: “Councils need to have oversight of exempt accommodation, with the powers and resources to crack down on poor providers and ensure this kind of housing and support is of a consistently high standard that meets people’s needs.”
