London boroughs’ spending on temporary accommodation hits £4m a day

Grace Williams, executive member for housing and regeneration at London Councils, said: “London is the epicentre of a national crisis – we are grappling with the most severe housing and homelessness pressures in the country.

“Homelessness is an injustice and has a devastating impact on individuals and families, undermining Londoners’ health, well-being and opportunities. As these figures show, it also brings utterly unsustainable costs to councils.”

She said the levels of homelessness spending were “a clear and present danger to the financial stability of London local government”, which represented “poor value for money compared to investing more in permanent housing solutions”.

Boroughs are looking to the upcoming Budget to give them extra support for homelessness services, she said.

London Councils’ asks of the government include a doubling of the Homelessness Prevention Grant, which provided boroughs with £157m in 2024-25, and a permanent increase in Local Housing Allowance (LHA) rates.

The body is also asking for the January 2011 cap on how much money boroughs can claim from the government for temporary accommodation costs via the housing benefit subsidy to be lifted. 

Data from 24 boroughs shows a gap of more than £96m in 2023-24 between the cost of providing temporary accommodation and what councils can recover.

A spokesperson for the Ministry of Housing, Communities and Local Government said: “Homelessness levels are far too high, which is why the deputy prime minister is taking action to tackle this with ministers across government through a dedicated inter-ministerial group.

“We will also support councils to meet the costs of temporary accommodation by giving them more stability through multi-year settlements.”

The report comes as Newham Council is requesting exceptional financial support from the government to deal with a 936% increase in temporary accommodation costs.

Yesterday, a survey from the Local Government Association found that one in four councils expected to apply for an emergency government bail-out in the next two years without further funding.

Last month, London Councils warned that boroughs were at risk of exceeding their homelessness budgets by £250m in 2024-25, and in March it sounded the alarm over a £700m “black hole” in local authorities’ social housing finances as costs outpace rental income.