I can't help wondering whether this is all about political correctness and fear of being accused of oppressing a minority, racism etc... (or, to put it another way, a lack of balls.)
S.8 of the HRA does give some protection, but that protection can be (and frequently is) set aside when it's considered to be in the public interest to do so. "Independent" Planning Inspectors do it all the time...
Assuming here that it really has been established that it was stolen in the first place, and that the present occupants of it don't have legal title (didn't buy it at a public auction in good faith)...
What if the police had simply arrested the adults on suspicion of handling, or something similar, leaving the children in need of care. And then take the children into care, meaning that the caravan was no longer occupied and no longer someone's home.
So, caravan get removed to the police pound, partly because it's evidence and partly to protect it from vandalism/further theft, and the true owners simply turn up at the pound, prove their ownership and collect it.
On release from custody the family could be housed in emergency accommodation, which is an unsatisfactory situation but one that's forced on a lot of totally innocent people who are homeless through no fault of their own.
But, that solution would require a determination to help the innocent and punish the guilty.