Private Companies Profit from Britain’s Hidden Homelessness Crisis
In recent revelations, it has come to light that private companies are reaping substantial profits from the escalating crisis of ‘hidden homelessness’ in Britain. Over the past five years, 166 councils across the country have collectively spent over £1.6 billion on temporary accommodation for homeless individuals, primarily due to a severe shortage of available social housing.
Councils are sounding the alarm over “unsustainable” costs associated with temporary accommodations, as homelessness rates continue to rise sharply, and social housing stock fails to meet the growing demand.
Temporary accommodation encompasses a variety of living situations, including privately rented homes, emergency housing such as hotels and B&Bs, converted office spaces, shipping containers, and hostels. The actual financial toll is likely even higher, as only slightly more than half of the councils in England, Wales, and Scotland responded to freedom of information requests conducted as part of an investigative report by The i Paper and Inside Housing.
The data indicates that the majority of the top 20 temporary accommodation providers in Britain are private companies. Notting Hill Genesis (NHG), a housing association, emerged as the largest provider, receiving £84.8 million from councils between 2019/20 and 2023/24. Other notable private housing companies in the top five include Theori (£69.1 million), Elliot Leigh Properties (£51.3 million), and Finefair (£50.5 million).
Additionally, Travelodge made it into the top 10, having received £26.1 million over the five-year span. As reported previously by The i Paper, homeless families have often been forced to share single rooms in Travelodge hotels, where there are no facilities available for cooking or washing clothes.
The skyrocketing costs of temporary accommodation are creating significant budgetary challenges for numerous financially constrained councils, some of which are now allocating more than half of their total housing budgets to emergency housing solutions.
London councils are the most affected, with Westminster City Council leading with an expenditure of £177.2 million. Enfield Council follows closely at £168.2 million, while the Royal Borough of Kensington and Chelsea has spent £121.1 million. Outside London, Bristol City Council has emerged as the local authority most dependent on temporary accommodation, with a total expenditure of £53 million over the past five years.
Councillor Adam Hug, housing spokesperson for the Local Government Association, which advocates for councils, stated: “More people than ever are seeking homelessness support from their councils, and the rising costs of temporary accommodation are exerting unsustainable pressure on local government finances.”
Unlike privately rented homes or social housing, temporary accommodation is not subject to regulation, resulting in a lack of minimum standards and frequent reports of poor living conditions. This phenomenon has led to the term ‘hidden homelessness’, as many individuals find themselves living out of sight in places like hotels and B&Bs. Unlike social rents, which are determined by the Treasury, private companies are free to set their rents at whatever levels they choose. As one anonymous local councillor remarked: “Providers have councils over a barrel.”
Siobhain McDonagh, the Labour MP for Mitcham and Morden and head of the All-Party Parliamentary Group for temporary accommodation, expressed concern that “virtually all” council spending on temporary accommodation is “badly spent.” She added: “My Friday advice surgery, which I have been running for 27 years, has become a temporary accommodation surgery where I discuss people’s fear of being made homeless and going into temporary accommodation – often in terrible conditions.”
She recounted distressing cases, including individuals housed in garden sheds, those without heating or hot water due to debt on their meters, and families unknowingly placed in accommodations lacking planning permission, only to be evicted when planning officers arrive. “And this is the accommodation for which council taxpayers are paying hundreds and hundreds of pounds,” she lamented.
Rising concerns are emerging regarding the suitability of temporary accommodation for the growing number of children among the families forced to seek emergency housing. Alarmingly, 74 children have been recorded as having died while living in such conditions. Data from the NHS-funded National Child Mortality Database reveals that 58 of these children were infants under the age of one.
Jane Williams, the founder and CEO of The Magpie Project, which supports mothers living in temporary accommodation with children under five, frequently encounters instances of damp and mold in these accommodations, alongside infestations of rats and cockroaches. She stated: “It shocks me that – even in light of the latest statistics showing that the state of temporary accommodation is endangering children – we are still not willing to address the companies profiting from this broken system.”
Dr. Laura Neilson, chief executive of Shared Health Foundation (SHF), a medical charity that co-runs the temporary accommodation All-Party Parliamentary Group, emphasized the urgent need for regulation. “We need regulations that cover accommodation standards and procurement processes to ensure accountability for how public funds are spent at both local and national levels,” she remarked.
McDonagh, along with Shared Health and homelessness charity Justlife, is advocating for immediate “Ofsted-style” inspections of temporary accommodation throughout the UK.
More Council Bankruptcies Feared as Temporary Housing Costs Soar to £1 Billion a Year
The combination of a lack of affordable social or council housing and rising homelessness due to evictions has led to a significant increase in the number of individuals living in emergency temporary accommodation. The latest data, as of June 2024, indicates that 123,100 homeless households are currently residing in temporary accommodations in England, reflecting a 16.3 percent increase from the previous year. Among these households, a staggering 159,380 children are included.
In response to these alarming figures, a spokesperson for the Ministry of Housing, Communities, and Local Government stated: “This government has inherited record levels of homelessness, and the extraordinary costs are detrimental to taxpayers, council budgets, and residents themselves. The only viable solution to this crisis is to reduce temporary accommodation expenses by constructing more homes and addressing the underlying causes of homelessness, such as ‘no fault’ evictions.”
Private Firms Claim They’re Assisting Councils in Finding Safe Accommodation
Elliot Leigh emphasizes that its rental prices are determined in collaboration with local authorities to strike a balance between Local Housing Allowance (LHA) rates and an agreed subsidy that reflects current market rents. They describe their new homes assessment process as “rigorous” and “highly selective” in choosing the landlords and properties they work with.
A representative for Travelodge acknowledged the pressures faced by local authorities and the challenges encountered by individuals desperately seeking homes. “Like many other hotel providers, Travelodge collaborates with local authorities to meet their temporary accommodation needs while guests await permanent housing. Our focus is on ensuring that all customers enjoy a high-quality experience across our hotels, recognizing that a hotel room is not a substitute for a home,” the spokesperson stated.
Both Theori Property Management and Finefair did not provide comments upon request, and NHG declined to comment as well. Councillor Liza Begum, Westminster City Council’s cabinet member for Housing Services, remarked: “Due to our location and property prices, Westminster faces the sharp end of the housing crisis. Like many other local authorities, we are seeing a significant increase in requests from individuals and families in housing need.”
An Enfield Council spokesperson added: “The housing crisis in the UK has worsened over the years, and unfortunately, temporary accommodation has become a long-term solution for many families, despite never being intended for that purpose. Like many other boroughs, we are grappling with a severe shortage of affordable homes, both for rent and in the private sector, which is driving up the need for temporary accommodation. This situation not only imposes a financial burden on the council but also adversely affects the health and wellbeing of residents, especially when they are placed in hotels.”
Councillor Elizabeth Campbell, Leader of Kensington and Chelsea Council, concluded: “It’s no secret that the cost of temporary accommodation is putting immense financial strain on councils everywhere.”
