Private companies are making millions from Britain’s ‘hidden homelessness’ crisis, it can be revealed.
Over the last five years some 166 councils across Britain spent more than £1.6bn on temporary accommodation for homeless people when there was no social housing available.
Councils have warned they are facing “unsustainable” temporary accommodation bills amid a sharp rise in homelessness, with social housing stock unable to meet demand.
As well as privately rented homes, temporary accommodation includes emergency housing such as hotels, B&Bs, converted office blocks, shipping containers and hostels.
The true total bill is likely to be higher, as only just over half of authorities across England, Wales and Scotland responded to freedom of information requests as part of a joint investigation by The i Paper and Inside Housing.
The data reveals the majority of the top 20 temporary accommodation providers in Britain were private companies.
The largest provider was housing association Notting Hill Genesis (NHG), which was paid £84.8 million by councils between 2019/20 and 2023/24.
However, private housing companies Theori (£69.1m), Elliot Leigh Properties (£51.3m), Finefair (£50.5m) were also in the top five.
Travelodge was also in the top 10, with the budget hotel chain having been paid £26.1m over the five-year period.
As The i Paper previously reported, homeless families have been forced to live together in one room in Travelodge hotels with no facilities to cook or wash clothes.
The spiralling cost of temporary accommodation has blown a hole in the budgets of a number of cash-strapped councils, with some now spending more than half of their total housing budget on emergency lets.
London councils are spending the most on temporary accommodation with Westminster City Council paying out £177.2m, and Enfield Council (£168.2m) and the Royal Borough of Kensington and Council (£121.1m) the next biggest spenders.
The local authority most reliant on temporary accommodation outside London was Bristol City Council, which spent £53m over five years.
Councillor Adam Hug, housing spokesperson for the Local Government Association, which represents councils, said: “More people than ever are turning to their council seeking homelessness support, and with increasing costs for temporary accommodation, it is putting unsustainable pressure on local government finances.”
Temporary accommodation, unlike privately rented homes or social housing, is not regulated – meaning there are no minimum standards and poor conditions are often reported. The situation has been referred to as a ‘hidden homelessness’ crisis, as homeless people are living out of sight in accommodation such as hotels and B&Bs.
Unlike social rents, which are set by the Treasury, private companies can also charge whatever they like in rent. As one local councillor, who wished to remain anonymous, said: “Providers have councils over a barrel.”
Siobhain McDonagh, the Labour MP for Mitcham and Morden and head of the All-Party Parliamentary Group for temporary accommodation, said “virtually all” the money she sees spent by councils on temporary accommodation is “badly spent”.
She said: “My Friday advice surgery, which I have been running for 27 years has become a temporary accommodation surgery where I discuss people’s fear of being made homeless and going into temporary accommodation – all too often in terrible conditions.
“I’ve had people housed in garden sheds, I’ve had people who have no heating or hot water because there’s debt on the meter in their temporary accommodation and the landlord of the property won’t sort it out.
“I’ve had people who are living in accommodation that doesn’t have planning permission and have only discovered it when planning officers turn up and get them to leave – and this is the accommodation that council taxpayers are paying hundreds and hundreds of pounds for.”
Fears are growing that some temporary accommodation is not suitable for the increasing number of children in families forced to seek emergency housing.
74 children have now been recorded as having died while living in temporary accommodation. Figures from the NHS-funded National Child Mortality Database reveal that 58 of those children were babies under the age of one.
Jane Williams, founder and CEO of The Magpie Project which supports mums living in temporary accommodation with children under five, said she regularly sees temporary accommodation with damp and mould, as well as infestations of rats and cockroaches.
She said: “It shocks me that – even in the face of the latest statistics that the state of temporary accommodation is killing children – we are still not willing to talk about those [companies] who are profiting from the system as it stands.”
She added: “Large property management firms hawking emergency accommodation to the highest bidder are making millions.”
Dr Laura Neilson, chief executive of Shared Health Foundation (SHF), a medical charity which co-runs the temporary accommodation APPG, said: “This further evidence shows the urgent need for regulation. Regulation that covers standards of accommodation and regulation of procurement and how the public pound is being spent both at local and national level.”
McDonagh, Shared Health and homelessness charity Justlife are all calling for urgent “Oftsed-style” inspections on temporary accommodation across the UK.
A shortage of affordable social or council housing, combined with rising homelessness due to evictions, has seen the number of people living in emergency temporary accommodation rise in recent years.
According to the latest data, as of June 2024, 123,100 homeless households were in temporary accommodation in England – a 16.3 per cent increase on the previous year.
A total of 159,380 children were included among those households living in temporary accommodation.
Responding to the figures, a spokesperson for the Ministry of Housing, Communities and Local Government spokesperson said: “This government has inherited record levels of homelessness and the extraordinary cost is bad for taxpayers, for council budgets, and for residents themselves.
“The only way out of this mess is to bring temporary accommodation costs down by building more homes and address the underlying causes of homelessness such as ‘no fault’ evictions.
“The Renters’ Rights Bill will deliver this and ensure safe, decent housing for tenants in temporary accommodation through the Decent Homes Standard.”
Elliot Leigh says its rents are set in collaboration with local authorities in a way that balances Local Housing Allowance (LHA) rates and an agreed subsidy that considers current market rents.
It described its new homes assessment process by its procurement team as “rigorous” and “highly selective in choosing the landlords we work with and the properties we lease”.
A spokesperson for Travelodge said: “We recognise the pressure local authorities are under and how difficult this is for them and for the people who desperately need a home.
“Like many other hotel providers, Travelodge works with local authorities to support them with their temporary accommodation needs whilst guests are waiting for a permanent home.
“Travelodge’s focus is on ensuring all of our customers have a high-quality experience across our hotels and we recognise that a hotel room is not a substitute for a home.”
Theori Property Management and Finefair did not respond to requests for comment.
NHG declined to comment.
Cllr Liza Begum, Westminster City Council cabinet member for Housing Services said: “Due to our location and property prices, Westminster faces the sharp end of the housing crisis. As with many other local authorities, we are seeing a significant increase in approaches from individuals and households in housing need.”
An Enfield Council spokesperson said: “The housing crisis in the UK has worsened over the years, and temporary accommodation has unfortunately become a long-term solution for many families, despite it never being intended for that purpose.
“Like many other boroughs, we are grappling with a severe shortage of affordable homes, both to rent and in the private sector, which is driving up the need for temporary accommodation. This is not just costly for the council, but it also has a negative impact on the health and wellbeing of residents, especially when they are placed in hotels.”
Cllr Elizabeth Campbell, Leader of Kensington and Chelsea Council, said: “It’s no secret that the cost of temporary accommodation (TA) is causing huge financial strain for councils everywhere.”
Additional reporting by Stephen Delahunty, news editor at Inside Housing and Alexa Philips, news reporter at The i Paper.
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