A gang of Lithuanian squatters are moving into people's homes and changing the locks while they are out.
George Pope, 72, took his dogs for a walk and returned to find a family had moved in and changed the locks.
And now it has emerged Angie Belalij, 37, also lost control of her home when illegal tenants allegedly moved in after she left to allow renovation work to go ahead.
Police and the council say they are powerless to act unless they have a court order requiring the squatters to be evicted.
The deadlock leaves the authentic residents in limbo and facing a potentially costly court battle to reclaim their own home.
They fear bogus estate agents are watching their homes and waiting for them to go away before moving in illegal tenants.
Mrs Belalij, a mother-of-one, was having her home in Barking renovated and so moved out.
But when she returned, she says she found a family of Lithuanians had moved in. They have now been living there for five months.
'I went round to see the builders and we found squatters in the house,' she told the Express.
'When I said to them "Why are you here, this is my house", they got in my face shouting at me that they had rented it and they had rights.'
A picture taken outside the property yesterday showed a young woman clutching a sharp kitchen knife, leaning over the gate.
Mrs Belalij says the squatters claimed they were paying £600-a-month to live there.
A printed notice stuck to the window cites the Criminal Law Act 1977 and threatens to prosecute anyone who enters without permission.
Because the squatters have refused to leave, they can only be evicted if the residents go to court.
George Pope also from Barking, had a similar problem when he took his dogs for a walk and returned home to find a family had moved in.
The pensioner, who suffers with arthritis, felt ill while he was out and stayed at a friend's house until he was well enough to return.
When he went back to the council house last week, he could not get inside because the locks had been changed.
He claims a man then walked up the path to his house and accosted him.
'I said, "This is my place". But he said, "This is our property and we intend to stay here unless you go to court". It made me feel ill.'
He added: 'I have been shaking ever since. I get panic attacks. It's just terrible.'
Mr Pope immediately called the council and police but he was told the new occupants could not be evicted because they were themselves the victims of a scam.
The pensioner said police told him the residents had paid £3,000 to a bogus estate agent to rent the property themselves for six months.
The retired Dagenham Ford worker, who was forced to stay with friends, said: 'Police told me it looked like a civil matter. But the squatters were using my home, my gas and my electricity - it's absolutely disgraceful.'
Mr Pope went back to his house on Monday morning to find all his belongings had been thrown out.
'I had been out for just two-and-a-half days. Someone must have been watching me,' he said. 'The rear door had been levered out with screwdrivers - that's how they got in.
'My neighbours are now too frightened to go out anywhere in case the same happens to them,' he added.
Mr Pope has finally managed to take back control of his house after the squatters fled but he no longer wants to lives there because of the experience.
The squatters have also allegedly stolen his washing machine, cooker, bed clothes and wall clock.
He said: 'The houses all around the area are being taken over by squatters. It is some sort of scam through some sort of estate agent. It's frightening.'
A Barking and Dagenham council spokesman said: 'This was a highly unusual situation and we are working closely with the police to try and determine exactly what happened.
'By taking quick action we have been able to restore Mr Pope to his home without the need to apply to court for an eviction notice. This would have been a very lengthy process.
'We are also aware of a housing association property in this street that is also being squatted.
'We have contacted the housing association concerned and have asked them to try and resolve the situation. We are extremely pleased that Mr Pope is back in his own home.'
A Met Police spokeswoman said: 'Police are investigating a civil dispute where there may have been fraudulent sub-letting of the premises.
'Anyone with information concerning the person who has fraudulently advertised this property for rent and subsequently changed the locks should contact Barking and Dagenham Police.'
Landlords cannot legally evict squatters without going to court. Police and councils have no power to act so even though squatters have no legal right to stay, you cannot physically remove them.
Landlords will have to pay up to £1,500 in legal fees to fund civil action.
Homeowners can go to the country court and apply for an interim repossession order if they do so within 28 days of their home being taken over.
A judge may grant an order which must then be served on the illegal tenants. If they refuse to move within 24 hours, they can be arrested.
The order is not permanent and a hearing will then be held before a judge to decide rightful ownership.