I would say that it would make you very happy to have it back now, thank you, seeing as how they are adamant that you have no part of the house.
I agree with those who say he is probably being exploited too. And for that reason alone you need to get to the bottom of this, and make him realise whats going on, which was why I suggested him getting a copy of the paperwork, so that he can see it independently rather than from you, who I suspect he feels will always paint his parents in a bad light.
I can also understand why he may feel that they are doing this in his best interests, to be kind, because I am sure they have always framed it in this way to him - that they are advising, helping, just protecting him. But they have not allowed him to grow up and be an independent adult - and this control they have over him is abuse, despite it being wrapped in sheepskin. From early teens on he should have been allowed to start making tentative steps towards independence, allowing a total detachment and autonomy by his 20s. We learn by making mistakes, we need to be able to stand on our own feet in order to have a relationship.
It doesnt mean you cut off your parents, it doesnt mean that your parents stop giving you advice, but it means that you are free to take their advice or not and stand by your own decisions - and refusal to take their advice should have no repercussions. Its a tricky path to negotiate, and hard to let go as a parent, especially if you can see disaster on the horizon, but you do no one any favours by stifling them and keeping them in a state of helpless dependance - abdicating all responsibility to them. The unhealthy attitude cuts both ways - he has a responsibility to grow up as much as they need to let go. If he wants to have a family with you then he needs to shift his loyalty.
I think that you are mistaking people's concerns about the house as a suggestion that you are materialistic and putting it above your difficulties. But the house is symbolic of the relationship as a whole - the joint account being another. Your DP is putting his parents wants above yours, and he is doing it willingly and unwittingly - giving them the power to make decisions for your family unit over you. The house is just one issue. Its a big issue because it shows that they are prepared to use him for their own gain, they are benefitting financially from the naive trust he has given them, but ultimately they are the ones who are making all the decisions.
So in answer to your OP, you DO have a PIL problem. But ultimately you have a DP problem, that is never going to get 'fixed' while he is is such complete denial. He may not actually want to fix it either, because it is going to be hard bloody work, it is going to be nasty, it is going to bring up many demons from his past and it is going to take years to untangle with an awful lot of emotional manipulation from his parents. Lying down and letting someone else mummy you for ever is an easy ride compared to that. But it will be at the expense of him ever having a relationship and family of his own.
You cannot control them. You cannot force your DP to change. You can only control what YOU do in response to this all. Your son will grow up to see this as normal, and although you wont be able to control him seeing his grandparents if your DP visited them, you would still reduce the impact on his everyday life if nothing is going to change. You can present the evidence to your DP and allow him to take it in. You can issue an ultimatum that he read the book with you, attend specialist counselling and disentangle himself from the parents (possibly requesting that if he is paying all the mortgage/paid the deposit and is taking all financial responsibility, that they sign the deeds over to him, which shouldnt be an issue if it is 'his' house surely) but you cannot force him to do these things. You can, of course, choose not to stay with him if he chooses not to.
you may take a look at 'entitled to' and see how much help you would get as a single parent. with savings there is no need to rely on the council - to be honest you are very unlikely to get social housing anyway unless there are particular health needs, but there is nothing stopping you looking at the private sector - you are in the position to offer a full deposit and several months upfront if needed. You would be entitled to housing benefit, tax credits, child tax credits, childcare help, child benefit and maintenance from your DP, so no need to think about drug dealing tower blocks.