New data from London Councils reveals that London boroughs’ monthly spending on temporary accommodation for homeless households grew by almost 40% last year – reaching £90 million a month.
Skyrocketing homelessness rates and a severe shortage of affordable accommodation continue to put a major strain on boroughs’ budgets. If the £90 million monthly spending continues this would mean more than £1 billion being spent annually on temporary accommodation for homeless Londoners. Boroughs are forecast to overspend on their homelessness budgets this year by at least £150 million.
One of London Councils’ top priorities for the Chancellor ahead of the Budget is to lift the unfair cap on the money boroughs can claim from the government to subsidise temporary accommodation costs. The subsidy has been frozen at 2011 Local Housing Allowance rates which no longer reflect the high cost of temporary accommodation options.
London Councils’ analysis also shows:
- Homelessness in London continues to rise. The number of Londoners presenting as homeless to their local borough increased 14.5% between September 2022 and September 2023 (the latest month for which data is available). The number of London households living in temporary accommodation increased by 7% over the same period.
- More than 175,000 Londoners are homeless and living in temporary accommodation. This is equivalent to one in 50 Londoners and on average at least one homeless child in every classroom.
- The number of properties available to use as temporary accommodation is decreasing. Many private landlords renting their properties to boroughs for use as temporary accommodation are cancelling these agreements, instead renting to private tenants or selling the properties altogether. The number of landlord ‘notices to quit’ received by boroughs rose by 56.5% between September 2022 and September 2023.
The high cost of living and turbulence in London’s private rented sector, alongside the longstanding shortage of affordable housing, have created a perfect storm. Research by LSE and Savills published last year revealed a 41% reduction in the number of London properties available for private rent since the pandemic.
Recommendations and our ask of London MPs
We appreciate anything London MPs can do to raise the challenges of rising homelessness and associated costs in the capital. We are calling on the government to help councils meet these rising costs by:
- Lifting the cap on housing benefit subsidy for temporary accommodation. This is the amount of money local authorities can claim from the government for their temporary accommodation costs. The subsidy has been frozen at 2011 Local Housing Allowance rates even though temporary accommodation is now significantly more expensive. London boroughs increasingly rely on relatively high-cost temporary accommodation options in B&Bs and commercial hotels and so lifting this cap would better reimburse boroughs for spiralling costs.
- Confirm allocations for additional homelessness prevention funding. At November’s Autumn Statement the government announced additional UK-wide funding of £120 million for homelessness prevention in 2024-25. London Councils welcomes this extra funding however allocations to individual local authorities still need to be confirmed. Borough also anticipate that even with this funding boost, temporary accommodation costs will still significantly outweigh government financial support. London Councils continues to call for more emergency funding.
- Help councils buy accommodation sold by private landlords. This could build on successful initiatives such as the Local Authority Housing Fund by providing increased capital investment for housing acquisitions.
- Increase Discretionary Housing Payments. These payments are used by councils to help residents in financial crisis meet their housing cost and are an essential homelessness prevention tool. Government funding for Discretionary Housing Payments in 2023-24 was frozen at 2022-23 levels, despite significantly increasing homelessness pressures.
- Make the increase in Local Housing Allowance (LHA) rates a permanent measure. Following the announcement at November’s Autumn Statement to ensure LHA rates cover the bottom 30% of market rents from April 2024, the government should ensure these rates track market rents to prevent future significant fluctuations between actual market rents and support for tenants.
- Bring forward a cross-departmental strategy to reduce homelessness. Tackling homelessness must become a major priority at a national level with government departments working together – in addition to key partners such as local authorities – as effectively as possible.
