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Monthly spending on temporary accommodation reached £90m in London last year
London boroughs’ spending on temporary accommodation grew by almost 40% last year, new data from London Councils has revealed.
The cross-party group, which represents councils in the capital, revealed that spending on temporary housing for homeless households reached £90m per month in 2022-23.
It warned that if the £90m monthly spending continues, it would mean more than £1bn being spent annually on temporary accommodation for homeless Londoners.
The group said skyrocketing rates of homelessness and a severe shortage of affordable accommodation have put major strain on boroughs’ budgets, labelling this a “critical danger” to their financial stability.
Ahead of next week’s Budget, London Councils is calling for more government support to help councils meet these costs and reduce the risk of requiring a Section 114 notice, which means they effectively declare bankruptcy.
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Temporary accommodation spending crisis could be the ‘end of local government’, council leaders warn
Birmingham, Croydon, Thurrock, Woking, Nottingham and Slough councils have all issued Section 114 notices since 2021.
Fourteen councils have issued the notices since the Local Government Finance Act took effect in 1988.
London Councils said a top priority for ministers is to lift the “unfair” cap on the money boroughs can receive from the government to subsidise their temporary accommodation spending, which is currently tied to 2011 benefit rates no longer reflecting temporary accommodation costs.
Inside Housing recently reported that the rules led to a £5.9m loss for Sheffield City Council in 2022-23.
On top of temporary accommodation costs, London Councils’ analysis shows that the number of Londoners seeking homelessness support from their local borough increased 14.5% between September 2022 and September 2023.
The number of London households living in temporary accommodation arranged by their local borough increased by 7% over the same time period.
At the same time, many private landlords renting their properties to councils for use as temporary accommodation are cancelling these agreements, as they are instead renting to private tenants or selling the properties altogether.
The analysis found that the number of landlord ‘notices to quit’ received by boroughs rose by 56.5%.
Darren Rodwell, executive member for regeneration, housing and planning at London Councils, said: “Homelessness has a devastating impact on individuals and families, while also bringing massive and unsustainable costs to boroughs’ budgets.
“Boroughs work hard to house homeless Londoners. However, London’s ballooning temporary accommodation bill is a critical danger to boroughs’ financial stability.
“If things go on the way they are, it’s no exaggeration to say these enormous costs pose a bankruptcy risk.”
He said the group is urging ministers to boost funding support for boroughs “grappling with a worsening homelessness crisis”.
A Department for Levelling Up, Housing and Communities spokesperson said: “We are committed to preventing homelessness before it occurs.
“Government is increasing the Local Housing Allowance to the 30th percentile of market rents from April, benefitting 1.6 million low-income households by an average of approximately £800 a year to help pay their rent and stay in their homes in 2024-25.
“We are giving councils over £1bn through the Homelessness Prevention Grant over three years, including £352m for London between 2023 and 2025.”
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