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Inside the economics of temporary accommodation
Although temporary accommodation now costs the taxpayer more than £2bn a year, spending on this type of housing remains largely unexamined. Inside Housing and the i newspaper joined forces to find out how the money is being used. Stephen Delahunty, Peter Apps and Vicky Spratt report on the findings. Illustration by Alex Williamson
.@insidehousing and @theipaper joined forces to find out how temporary accommodation spending is being used. @StephenD_ @PeteApps and @Victoria_Spratt report #UKhousing
England is spending more than £2bn a year on temporary accommodation, a bill that has pushed several councils to the brink of insolvency. Yet we know little about how that money is spent.
To find out more, Inside Housing has partnered with newspaper the i in a joint investigation. We sent Freedom of Information requests to 166 local authorities around the UK, which between them spent £1.59bn on temporary accommodation over the five years up to March 2024.
We have identified the 20 organisations bringing in the most revenue from these contracts (see table).
Our investigation found a complicated picture – with an array of landlords involved. Challenging the received wisdom about temporary accommodation, we also heard from a resident who is worried about affording a social rent home if they are moved (see box: ‘Temporary accommodation: the resident’s perspective’). And while most of the public debate on temporary accommodation focuses on private landlords, it was a housing association that received the most revenue from it.
The data gathered jointly by the i and Inside Housing reveals that housing association Notting Hill Genesis (NHG) received £84.8m for supplying temporary accommodation, mainly to central London boroughs Kensington and Chelsea, and Westminster (see box: Notting Hill Genesis).
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NHG declined to comment for this story, but most of its circa 3,000 temporary homes are leased from private landlords. It is also managing homes in London that it leases from fund manager Resonance. Its National Homelessness Property Fund is backed by organisations including Greater Manchester Combined Authority, and Bristol and Oxford councils.
Guaranteed rents
Theori Property Management, Elliot Leigh Properties and Finefair are also in the top four. They act as agents that offer guaranteed rents to private landlords, then bill local authorities to house homeless households. Each received more than £50m in local authority cash.
RMG manages more than 80,000 homes and is owned by social landlord Places for People. It was paid £36m, placing it sixth on the list.
Inside Housing asked each of the top 20 providers how they set the rents for temporary accommodation, how much they spend on repairs and maintenance, and how they assess the quality of new homes that come into their management. Four provided a response, which we will go into below.
These sums are being spent as councils are competing with each other and other public bodies for stock. One council officer with 20 years’ experience acquiring temporary accommodation, who wished to remain anonymous, tells Inside Housing: “We’ve talked for years about how we can act together rather than against each other, but when there’s a shortage everyone is desperate, because you have a legal duty to accommodate people.”
Our research feeds into Inside Housing and Homeless Link’s Reset Homelessness campaign, which launched in December and is calling for a systemic review of how homelessness services are funded in England.
Rick Henderson, chief executive of Homeless Link, says: “These findings just emphasise the fact that the funding of the homelessness system is completely broken. We need to break this cycle of funding temporary solutions, which is bad for the public purse, and, more importantly, bad for the individual people and families who are stuck in it.”
The amount spent on temporary accommodation has caused many councils to speak out over the past year about the pressures on their finances – and in turn that has contributed to reductions in funding for specialist support and homelessness services. Our new research raises questions about the extent to which money could be more effectively spent in the system – not least of all to deliver longer-term housing solutions.
Experts tell Inside Housing that the investigation highlights the need for further regulation of an area that is drawing so much public funding.
Shown our findings, Dr Amaran Uthayakumar-Cumarasamy, an NHS paediatrician who works with campaign group Medact, questioned whether it was right that private companies are making profits from this sector.
He says: “Health workers witness the impact of unsafe, unaffordable and insecure housing on children and young people on a daily basis. Undernutrition, respiratory illness and poor mental health are symptomatic of the failures of an unjust housing system. The use of temporary accommodation paints an especially bleak picture for both the short and long-term damage done to the physical, mental and social health of children and young people.”
“Undernutrition, respiratory illness and poor mental health are symptomatic of the failures of an unjust housing system”
Dr Laura Neilson is chief executive of Shared Health Foundation (SHF), a medical charity which is a co-secretariat of the All-Party Parliamentary Group (APPG) for Households in Temporary Accommodation. “This evidence shows the urgent need for regulation,” she says of our findings. “Regulation that covers standards of accommodation and regulation of procurement and how the public pound is being spent both at local and national level.”
Elliot Leigh was third on the list, after receiving around £51m over the past five financial years. The firm says its rents are set in collaboration with local authorities in a way that balances between Local Housing Allowance (LHA) rates and an agreed subsidy that considers current market rents.
Councils receive funding from central government for each temporary accommodation let of 90% of LHA rates as they were set in 2011, and must make up the rest of the costs from their own funds. Research by Homeless International found that, in 2022-23 alone, councils in England spent more than £200m topping up the amount allocated from central government.
Elliot Leigh tells us that around 90% of the income it receives from councils is paid directly to landlords, while at least 5% of the remaining amount is invested in repairs, maintenance and addressing voids. It describes 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”.
Top 20 providers by revenue received for temporary accommodation (2019-24)
Provider | Amount received |
Notting Hill Genesis | £84.8m |
Theori Property Management | £69.1m |
Elliot Leigh Properties | £51.3m |
Finefair | £50.5m |
AJ Bush | £36.3m |
RMG Ltd | £35.8m |
Midos Estates Ltd | £32.6m |
Denhan International | £32.0m |
Dabora Conway | £30.3m |
Travelodge | £26.1m |
Letting Inter Tio (Lint) | £23.3m |
Central Housing | £21.9m |
Apex Housing | £18.4m |
Stef & Phillips | £18.2m |
DMS Properties Services Ltd | £16.3m |
Rent Connect | £14.5m |
Smart Space Property Solutions Ltd | £14.2m |
Housing Enterprise Solutions Ltd | £12.2m |
Capital Homes | £10.9m |
The Baron Homes Corporation | £10.3m |
Source: Inside Housing/the i FOI request
Note: Figures rounded
Part of the Places for People group, RMG is sixth on the list after receiving around £36m over the past five financial years, 88% of which goes straight to the building owners. The charges it makes to councils include the rent that owners would expect to receive plus its management fee. This fee includes inspections, and repairs and maintenance. RMG says it applies the ‘Setting the Standard’ grading system and new properties are inspected and photos taken before occupancy.
Lint, which is 11th on the list after receiving around £23m over the past five financial years, says it works with councils to ensure the rents it charges “align with their requirements”. The group says rent is also being impacted by market factors such as interest rate rises and inflation. This is in addition to what it describes as “stringent regulations” such as “selective licensing and compliance documentations such as fire risk assessment and gas safety checks”.
A spokesperson says that because agreements with councils don’t include a deposit, and are agreed on a nightly basis, councils “can relieve their responsibility and liability by issuing a cancellation at any moment, and at times agents are required to go through due legal process, which can be lengthy and costly to gain possession of the property”.
Lint says a “significant proportion” of the income is reinvested in repairs and maintenance. On assessing the quality of new homes, the firm says each property undergoes a comprehensive check and void process to bring it in line with council requirements and housing regulations. Lint says it would welcome “reasonable regulations that promote accountability, consistency and quality across providers”.
Temporary accommodation: the resident’s perspective
Newbury House is a converted office block next to a busy dual carriageway opposite Newbury Park Underground Station. A resident of the Finefair-managed property, who wished to be known as Bill, invites Inside Housing into his well-kept, self-contained bedsit. The flat is warm and shows no signs of damp and mould, or any other maintenance issues. Bill proudly shows us improvements to the bathroom and kitchen areas he has made himself.
“I’ve been here two-and-a-half years, and I’m happy,” says the 72-year-old pensioner. He thinks his home is costing around £1,000 a month. This cost is being met by the council, meaning he is able to live comfortably on his pension. If the council finds him the one-bedroom bungalow he is waiting for, he is concerned his housing benefit will not cover all of the rent, plus he would have to meet the price of other bills out of his pension.
This would leave him worse off financially, despite the security of a social home. “I came to this country in 1966 and worked all my life. When I split up with my wife, I left my house, I left everything. Now, my pension is all I’ve got. Can you imagine me being able to afford my own place on what my pension is now?” he says.
Hotel providers
Hotel firm Travelodge is 10th on the list. A spokesperson says: “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 while 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 a hotel room is not a substitute for a home.”
Councils have been trying to reduce costs. A group of London boroughs set up Capital Letters in 2019, originally funded by the government. It unveiled plans in late 2021 to lease 4,000 mostly new build homes from investors in a deal worth £1.5bn. Last year, the firm announced a £750m deal to buy and refurbish 2,500 homes for temporary accommodation.
However, competition remains between councils and other bodies such as the Home Office. The council housing officer Inside Housing spoke to says: “They are often outbidding councils to try and take over hotels, so it is very tricky. The bottom line is there’s not enough accommodation out there, and from the point of view of landlords and agents, it’s a seller’s market.”
Councils have also been trying to get institutional investors like pension funds interested in temporary accommodation. Peter Denton, Homes England’s former chief executive, told an investment symposium in London last year that investors would be “perfectly happy” to support temporary accommodation if local authorities led the process.
His comments came after Elizabeth Campbell, leader of the Royal Borough of Kensington and Chelsea, told delegates at a Housing Forum conference in London how councils were seeking the “holy grail” of pension fund investment in temporary accommodation, but “none of us can quite unlock it”.
Notting Hill Genesis
Notting Hill Genesis usually has around 3,000 temporary homes at any one time, mostly leased to it by private landlords. Recently, the housing association agreed a deal to lease 590 temporary accommodation homes from a property fund backed by high-profile public bodies, investors and a major pension scheme.
The G15 landlord will manage the London-wide homes after the agreement with fund manager Resonance through its Homelessness Property Funds.
NHG will manage an initial 100 homes, where there are already tenants, followed by another 450. Most of the homes, which are across London, were previously managed by charity St Mungo’s.
One sector professional with knowledge of such deals is Maggie Rafalowicz, a director at consultancy Campbell Tickell.
She says: “The growth of Right To Buy greatly reduced the availability of social rent properties and led to the increased need for temporary accommodation. Housing associations like Notting Hill Genesis in collaboration with local authorities have historically filled the gap and developed large scale leasing schemes.
"Plainly the quality of TA provided by Registered Providers is better than a lot of what other private landlords are providing. The real solution though is to ramp up the supply of genuinely affordable rented housing.”
A Ministry of Housing, Communities and Local Government spokesperson says: “This government has inherited record levels of homelessness and the extraordinary cost is bad for taxpayers, council budgets and for the residents themselves. We are taking this seriously and the deputy prime minister herself is leading on the issue, chairing a cross-government effort to deliver a long-term strategy to tackle homelessness.
“The only way out of this mess is to bring costs down by building more homes and addressing the underlying causes of homelessness such as Section 21 ‘no-fault’ evictions. The Renters’ Rights Bill will deliver this and we also intend for it to provide safe, decent housing for tenants in temporary accommodation through the Decent Homes Standard.”
Dame Siobhain McDonagh MP, chair of the All-Party Parliamentary Group on Households in Temporary Accommodation, calls our findings “deeply worrying”.
She adds: “One way this government can work to bring an end to the use of expensive and often appalling temporary accommodation is through building more social housing units – an essential step to ending the vicious cycle of temporary accommodation.”
London boroughs are “between a rock and a hard place” where temporary accommodation costs are highest, says Grace Williams, executive member for housing and regeneration at London Councils.
She adds: “We want to help our homeless residents as best we can and we have clear duties under housing law, but the chronic shortage of accommodation in the capital means costs are spiralling. London faces the worst homelessness emergency in the country and if things continue like this, boroughs will go bankrupt.”
Recent longform articles by Stephen Delahunty
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How will exemption from the local connection test work?
The government announced it would exempt certain groups from the local connection test when they apply for social housing. Stephen Delahunty finds out what sector figures think is needed for it to work
Recent longform articles by Peter Apps
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It has been nearly seven years since the Grenfell fire, yet thousands of buildings are still in need of cladding remediation. Peter Apps investigates why the process has been moving at such a glacial pace
How a ‘Google Maps of heat loss’ might make retrofit easier to plan
Technology is opening up new ways to quickly assess which homes are leaking heat, making them a priority to retrofit. Peter Apps reports
What it is like to live in Nine Elms as an affordable housing resident
While the wealthy private owners of flats in Nine Elms enjoy the use of the swimming pool and orangery, affordable housing tenants are struggling to get repairs done. Peter Apps reports
The water will come: how should the social housing sector prepare for a wetter world?
Peter Apps looks at how social landlords should prepare themselves to respond to flood emergencies, which are set to become more frequent as the climate changes
The office-to-residential conversions which have become slum housing
Poorly converted office blocks are putting people in temporary accommodation at risk of serious harm. Peter Apps reports
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