A former hotel being used to house young families in temporary accommodation had to be protected by police armed with machine guns after masked men carrying machetes tried to storm the building.

Residents watched in horror as three cars pulled up outside the 18-bed House of Multiple Occupancy on Beulah Road and six men wearing hoodies and face masks jumped out with eyewitnesses saying they were carrying machetes and knives. They made straight for the front door of the three storey house which they started to try and smash their way through.

Fortunately, they couldn’t break through the reinforced glass and left but their cars circled around, appearing in front of the hotel again, several times before police arrived. There were three armed units and a total of 12 officers carrying handguns, tasers and submachine guns searching the surrounding area on foot attempting to find the suspects. The police helicopter also circled the area looking for the gang on Bank Holiday Sunday (Aug 31).

Prior to the incident three young men, who were also staying in the HMO were seen hanging around outside and all were carrying knives. It is believed they were the intended targets.

Several residents were understandably terrified and are now frightened to leave their homes. Women and children including newborn babies accommodated in the hotel, were also traumatised and distressed.

One eye witness said: “It’s fortunate that nobody in or outside of the hotel got caught up in this. It could so easily have happened.”

Local authorities including Croydon have residents living in the former Beulah House Hotel at 29-31 Beulah Road. According to council records Croydon has paid tens of thousands of pounds to Oak Housing Ltd who manage the premises.

The following day, officers from the newly formed, London wide, serious violence unit came to speak to residents and neighbours and several officers went into the hotel.

Residents have expressed concern that drug addicts have been housed at the address and they want the council to impose licence time residential manager on the premises.

A police spokesman told The Chronicle: “A group of males were trying to force entry to an address at the location; one was armed with a knife. Officers, including armed officers, attended the scene but those in attendance had fled. No reports of any injuries. No arrests.Enquiries into the circumstances continue.”

The three storey house has been at the centre of a previous scandal featuring on Channel 4s dispatches in 2011 Landlords from Hell. It challenged Croydon council’s provision of housing and whether the HMOs licensed by them met acceptable conditions.

The undercover investigation by Jon Snow showed rogue landlords offering shoddy housing and the illegal practices they used to exploit tenants often housed in temporary accommodation by local councils paying tens of thousands of pounds for the privilege.

The property has always been run as an HMO with the freeholder listed as BK2 Properties Ltd (incorporated in British Virgin Islands). The current leaseholders Oak Housing Association, who were not involved with the property at the time of the Dispatches programme, describe themselves as a FOR profit housing provider which offers to manage property for landlords.

It is owned by a private equity company T&B Capital and Bmor group investment management. There are 18 rooms and the HMO licence allows a capacity of 31.

At last month’s ward panel Thornton Heath’s police Sgt Andy Smith asked the council to provide access to the HMO database as it would help police to know who ran the HMOs and whether they were managed adequately to mitigate the risks and the impact on other residents.

In January it was reported that spending on temporary accommodation for homeless families in Croydon is nearly £40 million.

The council said it was an ‘ongoing’ police investigation and they couldn’t comment. Oak Housing also said: “We are unable to comment further.”