London boroughs are reckoned to have spent close to £500 million on temporary accommodation over the last 18 months, as they struggle to meet statutory requirements in London’s stressed housing market.
A Freedom of Information request has revealed that five boroughs between them spent £216 million together over the period. Ealing and Haringey both topped £48 million each, while Westminster and Hackney spent £41 million, ahead of the £36 million paid out by Waltham Forest.
In contrast, those less afflicted by a shortfall in temporary accommodation were low spenders Sutton, which spent just £203,000 and the City of London which paid out £366,500. Southwark, Merton and Hammersmith and Fulham all paid between £2-3 million.
If, instead of rent, the funds were diverted into building homes for temporary accommodation, the sum could instead have created around 2,000 homes, at an average £250,000 per front door (Westminster’s affordable housing contribution tariff for 2014/15).
Central government has traditionally refunded councils for their temporary accommodation costs, via a payment through the housing benefit system. But that funding is now falling short. “Around a quarter of what boroughs spend on temporary accommodation is met through their own resources. This is causing a huge financial burden not only on but boroughs, but on the public purse,” said Sir Steve Bullock, the mayor of Lewisham and London Councils’ Executive member for housing.
“Boroughs must be provided with adequate resources and support to carry out their duties towards homeless people and, in the coming months, we would welcome further discussion with the government about how to address the homelessness pressures in London.”
“These figures underline the enormous pressure London’s local authorities face in finding suitable housing,” said new deputy mayor for housing, James Murray. “The mayor is determined to build thousands of genuinely affordable homes to both buy and rent. He is also urging central government to give local authorities the resources they need to fulfil their statutory duties for homeless Londoners, and to ensure he has the powers needed to address the housing crisis head-on.”
In February, London Councils published a report prepared by the Centre for Housing Policy at the University of York. That estimated the contribution by boroughs towards temporary housing costs, at £170 million in 2014/15.
That report noted that rent rises in the private sector mean some people are simply priced out of the London rental market. “In actuality, an increasing majority of households now approaching local authorities as homeless are simply unable to afford private sector rents.”
Some boroughs are shipping those in housing need out of London to cheaper areas, says the report, though this is not a complete solution.
Less and less private landlords are interested in the temporary accommodation market, says the report. And those that do, operate “a highly organised niche market within London’s PRS”, using the power they have from the supply shortage, to push up prices desperate boroughs pay. Housing associations have pulled out of the temporary segment, as subsidies to support management costs have been reduced.
The report concludes: “Central government support for TA has presumed that it might be possible to contain housing costs through reducing the availability of subsidy….. that measure is simply ineffective. It is evident that those costs have not been contained.” It says the current situation not only represents a bad deal for the taxpayer, it is also upsetting the lower end of the private rented sector, to the wider detriment of low income households.
LPA Perspective: In the name of cuts, the government appears to cutting its grant and simply shifting an obligatory cost back onto the balance sheet of the boroughs. At the same time, welfare reforms are backfiring and throwing more into the temporary accommodation market. And those few private landlords prepared to take the hassle of temporary tenants, are understandably hitching up their prices in the face of rising demand. Most are taking an easier option of looking for tenants who can afford their rents, in a booming market.
Yes, we know London has a housing crisis, yes we know it needs more homes to be built, but here is a situation crying out for some wider thinking, and some real experiments. The capital is still growing at a faster rate than at any time since the Victorian era, and even diverting the cash to developing new homes would barely make a dent on need, with UK net immigration of 330,000 last year – of which probably 100,000 end up in the London area.
As the cash spent out is drifting up month on month, and the availability of decent space is declining, radical action is needed. Could property guardian companies, which make use of temporarily available unused properties, play a role in delivering value accommodation? Could local authorities use models as as the YMCA’s Y:Cube to create quickly built homes for temporary use? Who will develop pop-up accommodation to fill empty sites, and help solve the problem this year?
It is hopeless to suggest that Boroughs have the necessary skills, or can acquire them quickly enough, to tackle this problem at the rate required without jeopardising taxpayers’ interests and a solution that leans on the private sector as expert providers of new build homes must be a fundamental part of the solution that Sadiq Khan and James Murray need to consider.
The public sector, rather than embarking on a ‘back to the future’ solution of council-house building, which everyone seems to be calling for, should pay for competitive construction of new homes and then should instead, rather than bolster the dysfunctional symbiotic relationship between local politics and provision of council housing, become the body that ‘polices’ the provision of social housing through housing associations and the private sector.
We all need to subsidise the provision of more housing, because it presents the biggest and most tangible threat to London’s economic future.