Councils paying millions in incentives to private landlords is a senseless waste

At Generation Rent, we know a thing or two about the broken rental system, so we sent Freedom of Information requests to 42 councils – all London councils that provide statutory homelessness services and the 10 councils outside London with the biggest problems with homelessness – on the issue of ‘private landlord incentives’.

The 37 councils that responded collectively paid private landlord incentives on 10,792 occasions in the year to 31 March 2025, spending more than £31m in the process. This is an average of 292 incentive payments per year per council, with an average yearly spend of almost £850,000.

In London, the 27 councils that responded spent over £24m on landlord incentives in the year to March 2025, a 54% increase compared to the last time data was collected on this issue in the capital in 2018.

Clearly, spending millions of pounds a year to encourage individual landlords just to agree to go on and collect rent for their home is a senseless waste of public money, especially when you consider that a BBC study found councils sold £2.9bn of public assets over the past two years to help offset debts.

Our analysis found that the collective money spent by councils on landlord incentives could have funded 116 public libraries for a year, with analysis in the House of Commons library showing a net loss of 150 public libraries in England between 2016 and 2023.

Years of government decisions have backed councils into a corner. Without social housing to offer to people, finding people a private rented home is seen as preferable to providing temporary accommodation.

Meanwhile, the current government has frozen Local Housing Allowance, the rate used to calculate the amount of housing benefit private renters can claim. Analysis from the homelessness charity Crisis found that just 2.5% of private rented homes in England were affordable for people claiming housing benefit in 2024.

A certain subset of landlords are then using the desperation of councils to line their own pockets. When I worked in a London council’s homelessness division, I would regularly see landlords playing councils off one another.

For example, if one council offered a landlord a £3,000 incentive to house a household, the landlord would then take that to a neighbouring council and see if they could offer them more, before returning to the original council in an attempt to jack up the price even further. Often they would end up with double the original price.

“A certain subset of landlords are then using the desperation of councils to line their own pockets”

I also regularly saw people approaching the council with a Section 21 ‘no fault’ eviction saying their landlord had issued the notice and instructed them to approach the council to receive a new incentive payment to encourage the landlord to cancel the eviction.

It’s therefore seriously welcome that the government’s Renters’ Rights Bill, which will hopefully become law by early next year, will outlaw Section 21 evictions. This will help stem the tide of private renters entering homelessness services somewhat, but the glaring gap in the legislation is a lack of any mechanism to bring down the soaring cost of renting.

With new rents now over £400 a month more than three years ago and renters in London spending more than 40% of their income on rent, the government must take action to limit how much landlords can raise the rent by. Unfreezing Local Housing Allowance in the upcoming Autumn Budget would also help give renters claiming benefits relief from towering household costs.

Councils essentially bribing landlords while cutting vital services is akin to pouring water into a leaking bucket: the harder they try to fill it, the faster it drains, with our public money lining landlords’ pockets in the process.

Nye Jones, head of campaigns, Generation Rent