I'm almost certain that squatter's rights aren't applicable here. Those come up when someone has been openly living somewhere for a long period of time and where no action has been taken against them. The situation here deals with people who have been there a short time, where action has been taken.

https://en.wikipedia.org/wiki/Adverse_possession

In general, a property owner has the right to recover possession of their property from unauthorised possessors through legal action such as ejectment. However, in the English common law tradition, courts have long ruled that when someone occupies a piece of property without permission and the property's owner does not exercise their right to recover their property for a significant period of time, not only is the original owner prevented from exercising their right to exclude, but an entirely new title to the property "springs up" in the adverse possessor. In effect, the adverse possessor becomes the property's new owner. Over time, legislatures have created statutes of limitations that specify the length of time that owners have to recover possession of their property from adverse possessors. In the United States, for example, these time limits vary widely between individual states, ranging from as low as three years to as long as 40 years.

Although the elements of an adverse possession action are different in every jurisdiction, a person claiming adverse possession is usually required to prove non-permissive use of the property that is actual, open and notorious, exclusive, adverse and continuous for the statutory period. The possession by a person is not adverse during periods when they are in possession as a tenant or licensee of the legal owner.

The issue with the hotel and pub in London, I think, is what I described in a comment below. Trespass in England is mostly part of civil law, rather than criminal law. So it's usually not a crime to trespassing. You can be sued, but not sent to jail for it. It doesn't mean that the state is fine with it, just that it's a different class of law involved.

On squatter's rights, I think that the aim may be to try to keep the situation and law in line with each other, to discourage the two from drifting apart. You don't want to wind up with a situation where situation of illegality is the norm, and then someone comes out and brings the law into force and it's way more disruptive (and possibly unexpected). It's not designed to provide free stuff to the squatter, but to ensure that landowners act sooner rather then later.

There are similar rules in some other areas. For example, a trademark holder must defend their trademark against infringing use, or they can lose rights over the trademark. They can't wait until someone has built up a major brand based on the trademark and then try to start enforcing it.

https://en.wikipedia.org/wiki/Laches_%28equity%29

In common-law legal systems, laches (/ˈlætʃɪz/ LAT-chiz /ˈleɪtʃɪz/; Law French: remissness, dilatoriness, from Old French laschesse) is a lack of diligence and activity in making a legal claim, or moving forward with legal enforcement of a right, particularly in regard to equity. This means that it is an unreasonable delay that can be viewed as prejudicing the opposing party. When asserted in litigation, it is an equity defense, that is, a defense to a claim for an equitable remedy. It is often understood in comparison to a statute of limitations, a statutory defense, which traditionally is a defense to a claim "at law".

The person invoking laches is asserting that an opposing party has "slept on its rights", and that, as a result of this delay, circumstances have changed (witnesses or evidence may have been lost or no longer available, etc.), such that it is no longer a just resolution to grant the plaintiff's claim. Laches is associated with the maxim of equity: "Equity aids the vigilant" - not those who sleep on their rights. Put another way, failure to assert one's rights in a timely manner can result in a claim being barred by laches.