Temporary Accommodation: Searching for financial solutions to the crisis
CT Senior Consultant, James McHugh, explores how local authorities, housing providers and investors are seeking financial solutions to one of the most pressing social challenges of our time.
The Temporary Accommodation (TA) crisis shows little sign of abating, with the number of children living in TA continuing to reach new heights and cash-strapped local authorities’ spending on TA increasing by a quarter in just a single year. This is a crisis with profound costs, both human and financial, which are clearly unsustainable and undesirable.
Collaborating for change: The Temporary Accommodation Network (TAN)
In recognition of this, we have been partnering with Devonshires on a Temporary Accommodation Network (TAN) to find more sustainable solutions to the crisis. Through TAN we have sought to share best practice and generate discussion via the publication of case studies and a programme of free-to-attend events. Our membership is open and diverse, ranging from local authorities and registered providers to funders and private landlords – demonstrating the breadth of concern about this issue across our sector.
At our most recent TAN event on 30 September, we convened a panel of speakers to share their ideas, experiences and insights into the financial implications of TA. This included Common Projects who have worked with Croydon Council to successfully convert a long-term empty office building into high-quality, modern and energy efficient homes for homeless households; Newbridge Advisers on the role of different financing routes and delivery models for local authorities; Resonance on the potential benefits of leasing models tied to social impact investment; and Lambeth Council on the adverse consequences of TA on the availability of privately rented homes.
Our event proved enormously popular and generated much discussion, which sadly did not come as a surprise to us given the escalating costs involved in providing TA. Shelter’s recent analysis of official data for 2024/25 shows that over £2.8 billion was spent by local authorities on providing TA – a figure which has more than doubled (+118%) in the last five years. Of particular concern are the sums being spend on nightly paid, self-contained accommodation (over £1 billion) and B&Bs and hostels (£844 million). These are typically the least suitable forms of TA as they are often characterised by a lack of key amenities and private space, which has damaging effects for children, vulnerable people and those facing the trauma of having recently lost a permanent home.
In some respects, this is a story which has become all too typical of many our country’s public services, stretched by over a decade of austerity and buffeted by the successive impacts of Brexit and the pandemic. Extortionate costs, ever-rising demands, and worsening outcomes for individuals could just as easily describe the current situations in special educational needs, social care, asylum, or prisons and probation.
Policy reform and financial solutions
As we cast our eye towards this month’s Budget Statement, the escalating TA crisis will no doubt be of great concern to the Chancellor and Treasury officials. Of course, the long-term solution is to provide more permanent affordable housing, which has been recognised through the relatively generous settlements made via the new Social and Affordable Homes Programme and National Housing Bank, as well as various planning reforms aimed to accelerate housebuilding. But these will take some time to come to fruition and will be of remote comfort to those currently living in TA.
Many campaigners and commentators have quite rightly pointed to the counterproductive role of housing benefits in driving the TA crisis. In particular, the rate at which the Local Housing Allowance (LHA) is set and the freeze which is in place until at least 2026, both of which serve to decrease the availability of lower-cost private rented housing. The likelihood of the LHA being revised seems slim in the context of recent u-turns on the Winter Fuel Allowance and Personal Independent Payments which increase pressure on other parts of annual managed expenditure on welfare.
One aspect of the LHA which is in desperate need of reform is the current ‘subsidy rule’ through which local authorities can only claim back 90% of the January 2011 LHA rate (plus a management cost element) for most forms of TA. Suffice to say the UK economy and housing market have changed hugely since 2011, and this simply adds to the profound financial pressures facing local authorities. It diverts resources from local areas which would surely be better spent on homelessness prevention and increases the risk of more costly intervention to rescue struggling local authorities. Now should be the time to make such a change.
To discuss any points raised in this article please contact James McHugh:Â James.McHugh@campbelltickell.com
