The most common and most likely answer to this crossword clue is the 9 letter word SQUATTERS
I've seen this crossword clue in The Guardian
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More clues leading to the result SQUATTERS
Buddy explains!

The straight part
We know that "Down-at-heel/illegal tenants" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case down-at-heel/illegal tenants = squatters.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does SQUATTERS mean?
SQUATTERS noun- One who squats, sits down idly.
- One who occupies a building or land without title or permission.
- A large-scale grazier and landowner.
- A squat toilet.