Hotel stays: can pilot schemes reshape the asylum housing system?

The pilots are testing various models. Councils will try bringing their own empty stock back into use. They will also try buying up new homes to house asylum seekers, and working with the government to identify medium-sized sites in their areas.

Inside Housing understands that local authorities would own the properties they acquire, but lease them to the Home Office at Local Housing Allowance (LHA) rates for a 10-year term. After this, councils would regain control of the properties, when it is hoped demand for asylum accommodation will reduce. As for the £100m fund, it is expected that this will be set up within the Ministry of Housing, Communities and Local Government (MHCLG) and will take a similar shape to the Local Authority Housing Fund, which helps councils acquire homes for use as temporary accommodation.  

‘No-brainer for councils’

Bella Sankey is Labour leader of Brighton and Hove Council in East Sussex, which houses around 65 asylum seekers in a hotel. She says the authority has expressed an interest in all three of the pilot approaches and it is a “total no-brainer” that councils, rather than private providers, take up responsibility for asylum accommodation. 

“Councils understand how to do integration very well, and already run so many complementary wraparound services,” she says. “We’re responsible for everything: adult social care, education – you name it, we do it.”

Ms Sankey, who is a former director of charity Detention Action and policy director at human rights organisation Liberty, adds: “As long as we are resourced to deliver it, it is a win-win situation for our housing needs, because it means we can invest in properties, whether that is building, buying or renting.”

Peterborough City Council houses one of the highest numbers of asylum seekers in the East of England. Council leader Shabina Qayyum is “still awaiting details” on its pilot, but says the council is keen to work on “creative solutions” to managing and reducing the impact of asylum hotels.

Is there a bigger role in a reformed asylum housing system for housing associations? Kate Wareing, chief executive of Soha in South Oxfordshire, says housing associations should “step back into” the space of providing temporary accommodation for homeless households and asylum seekers. She is lobbying the government to allow the sector to bid for the £100m capital fund, ideally through Homes England. 

Last year, Ms Wareing published a report with Impact Works Associates calling for a £1.75bn capital fund across MHCLG and the Home Office to provide short-term accommodation and temporary accommodation for asylum seekers. She argues that the cost would be recovered in only seven months from the savings when compared with hotel charges.

The Home Office declined to give Inside Housing any more information on the pilots, or confirm its shortlist. But its submission to the Home Affairs Committee’s live parliamentary inquiry into asylum accommodation set out its ambition for “significant change”, including procuring and managing its estate in a way that prevents cross-competition with other parts of the public sector.

Harmful system 

The AASC contractors have been struggling for years to cope with soaring demand. Serco told the Home Affairs Committee it had seen service users double from around 20,000 to 40,000 in its contract lifetime.

The rising numbers are due to slower processing of asylum claims in the Covid pandemic, which created a large backlog, an increase in asylum applications and people arriving by small boats. As a result, hotel use ballooned to a peak of 56,000 asylum seekers in 400 hotels in 2023. Half of these hotels have since closed, but a lack of dispersal accommodation means the system remains under huge strain. 

At a local level, councils and the Home Office are bidding on the same properties. City of Wolverhampton Council said in its evidence to the inquiry that it could not compete with prices offered by its local contractor Serco, and said it was even aware of private landlords that had evicted tenants to take up leases.

Property quality had deteriorated, Wolverhampton said, and a recent inspection of its dispersal property found “serious concerns” in relation to basic health and safety, and ended in Serco being fined by the Home Office. A Serco spokesperson says: “All properties that we rent must meet agreed standards and they are subject to inspection from the Home Office and the relevant local authority. If issues do occur, we deal with them swiftly and to acceptable standards.”

198
Councils that expressed an interest in the Asylum Dispersal Pilots

30k
Asylum seekers currently living in hotels in the UK

There are concerns about conditions in hotels, too. London Councils, a body representing boroughs in the capital, described asylum seekers being kept in windowless rooms, cases of malnutrition due to poor-quality food, and councils not being informed about fires in two hotels. A recent BBC investigation highlighted the often dangerous conditions in hotels, finding people cooking in hotel bathrooms using electric hobs, and covering smoke alarms with plastic bags. 

London has the highest proportion of asylum seekers in hotels of all UK regions – 14,310 people as of September – and London Councils says the Home Office and Clearsprings have “no plan” for reversing the trend. It makes the case that a move away from hotels was disincentivised due to the greater profits made via hotel procurement. Clearsprings declined to comment. 

The three AASC companies made a combined profit of £383m on asylum accommodation contracts between September 2019 and August 2024, according to a National Audit Office briefing. 

“Councils understand how to do integration very well, and already run so many complementary wraparound services”

With tensions running high over asylum seeker housing, some councils are concerned about how devolving the system to local councils will be received. Chris Read is the leader of Rotherham Council, an area that was affected by riots last summer when protesters set a Holiday Inn Express in Manvers on fire with people inside. He says hotels have been a “bit of a nightmare” for the area, but is sceptical about the feasibility of “renationalising” the private contracts. “We already have far more demand from local people for existing council stock than we’re able to deal with, and there is a real sense of unease among communities about how fairly that housing is allocated,” he says.

He argues even if he acquired 400 properties, there are 7,000 people waiting on the housing register at the moment, who “would expect, I think quite legitimately, to be given priority access to that”. Mr Read says the priority should be to speed up asylum claims, which would free up more accommodation in the system.

Councils vs government

Yet Ms Sankey points out that “warehousing” people in hotels also “undermines community cohesion”. And London Councils said in evidence to the Home Affairs Committee inquiry that the existing asylum accommodation pits councils against the government, as seen recently in Epping, where the council tried to block asylum hotel The Bell Hotel through the courts. 

Giving local councils control could reset the dynamic and allow asylum seekers to be absorbed into the wider homeless population they house, taking focus off them, the body said. However, the stakes are high. London Councils’ inquiry submission said: “If not done well, it could set up a different dynamic that has the electorate concerned that they aren’t getting their fair share of local resources.”

Dr Mort agrees it is important to think about how the pilot project might look for communities that feel “already quite downtrodden”.  She says it requires someone to be “bold enough” to lay out the case.

In Brighton, Ms Sankey is adamant the argument can be won. “The way you explain it to your resident population is that at the moment you have vast sums of money – we’re talking about billions of pounds a year – going into the pockets of private companies and private shareholders.

“If councils can get our hands on some of this investment, we would be able to turn it into something for the public good,” she says.

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