She claims they're squatters. Seems they claim they're valid tenants and that they have proof of this. Only the courts can decide on it, not the police.
At this stage, they have to prove there's no tenancy. "police told Andaloro the issue had become a landlord-tenant dispute which could only be settled in housing court."
Otherwise, landlords could use the "they're squatters" to illegally evict or harass genuine tenants, so this is how tenants are protected from those rouge landlords.
The issue there is that it can take 20 months to get the case seen in the courts, which is a ridiculous amount of time and an opportunity loss for her if she's innocent, since she can't use the house (plus if the tenants are innocent but can't afford to move away from a rouge landlord, it keeps them in limbo too, since if it's like in the UK they're not homeless so can't access much support with finding somewhere to live, but also don't know how long they'll be living there).
There is also the possibility that the government are using private landlords to try to alleviate the homelessness issue, rather than dealing with it themselves. A similar thing happens here in the UK - there's a housing shortage and the local governments don't have the power or money to do mass building of houses or to fund better services for the homeless or people at risk of homelessness (ie literally any tenant whose landlord wants to evict them, which includes for "no fault") or to fund measures against homelessness risk factors (eg child abuse, mental healthcare, physical healthcare, drug addiction, giving people a leg up out of poverty traps (there's research on whether just giving people a one-time payment can alleviate a lot of poverty long-term, results are mixed. There are some cases where it pretty obvious it could help eg someone needs a car for job opportunities, but can't get a good enough job without a car to finance driving - giving a grant or loan could get them out of that trap and even save the government long-term, compared to dealing with that person's future homelessness (admin costs, legal costs, cost of housing them, cost of policing homelessness etc), food stamps, medicare etc), so instead of housing people or putting them in hostels, the local government advises people to stay in the property if they're evicted and can't find somewhere to live, to give them a few more months to find somewhere to live.