Housing association Clarion has paused controversial plans to sell off a boarded-up Holloway property – after the body of Erik San-Filippo was found in a bin in the property’s front garden.

Campaigners were "gearing up" to challenge the "money grabbing" plans to sell the three-storey Tollington Road address to the highest bidder at the five star InterContinental Hotel, in Mayfair, on May 30.

But the body of 23-year-old Italian national Mr San-Filippo was found in a bin out the front on Saturday - and Clarion has now confirmed it will delay selling up while the police investigation takes place. The cause of Mr San-Filippo's death is being treated as "unknown" and a post-mortem returned inconclusive results. A 52-year-old man was arrested on suspicion of murder on Sunday but has been bailed until June.

The disused six-bed house, which formerly accommodated multiple Clarion tenants but is now abandoned, was being touted with a "guide price" of £850,000 by property consultancy firm Allsop. Clarion would not say why it had emptied the building.

Andy Bain, who chairs campaign group Islington Homes for All (IHA), which has also been instrumental in lobbying for social homes in the former Holloway Prison site, said the group is gearing up to fight the sale.

He told the Gazette ahead of Clarion's announcement today: "We want to meet the demands of the 14,000 [on the housing waiting list] in Islington for social housing, so when housing associations are selling off homes, for whatever reason, we are objecting to that and saying: 'Keep them in the social housing stock.' We have already put up stickers around [the property]."

Neighbours said the building was squatted after Clarion vacated it and became an alleged drug-taking spot, leading to the building being sealed off.

"We used to have a lot of noise from this house," said Stean Segbo, who's lived next door for two years. "People were always leaving stuff in our garden and screaming. So we sent letters of complaint to the council and the doors [of the house up for auction] got changed and locked."

IHA hopes to emulate the recent success of a push to stop social housing being sold off by Peabody in Tower Hamlets.

Glyn Robbins, a social housing campaigner who manages the Quaker Court Estate off Old Street, was actively involved in the Bethnal Green protest and had been helping IHA with the Tollington Road resistance.

"It has been going on for ages," he said. "Councils, housing associations, the NHS - public bodies have been selling off homes that are intended for social rent and we're gearing up to protest. The selling of off social housing is a crime - and we need as many people saying: 'This has got to stop'."

Islington's housing boss Cllr Diarmaid Ward had called for a meeting with the Clarion chiefs prior to the announcement the house would not go under the hammer after all.

He said: "Firstly, we are really proud so many of our street properties in the borough are council or social homes and I hope that remains the case for a long time.

"The council would only ever consider selling off our properties in extremely exceptional circumstances and even if we did all profits would go back into building homes.

"If any housing association is considering selling any home in the borough I would be really concerned about that - whether it's a one-bed or a six-bed it's a family in terrible need who can't be housed."

A Clarion spokesperson said: "We can confirm we will be removing 53 Tollington Road from auction while the police investigation into this tragic event is ongoing. Our thoughts are with the family and friends of the victim at this time.

"As the largest social landlord in the country, we constantly review how we support people with the greatest housing need. If one of our homes becomes vacant, we carry out an options appraisal to decide how best to use it in the future. Our options appraisal for the property in Tollington Road concluded that the property would require very significant investment to be brought up to our standards and then re-let as a social tenancy. As a result, we decided that selling was the responsible approach. Crucially, the revenue we will receive from the sale will be invested into our existing stock and building new affordable homes.

"Last year Clarion Housing Group invested £510million in new homes across the country, and we invested approximately £89m in existing homes. In Islington, a £15m programme of planned improvement works to our existing properties will begin this year. In addition, Clarion has a significant community investment programme in the borough, led by our charitable foundation, Clarion Futures."