Cashing in: how a shortage of social housing is fuelling a billion-pound a year temporary accommodation industry

Posted 03 Feb 2020

Shelter has been working with BBC’s Panorama on an in-depth investigation into the providers of temporary accommodation (TA) for homeless households in England, which airs tonight at 8:30pm.

The housing charity has carried out an extensive analysis of government data, as well as its own Freedom of Information Requests (FOI), to expose who is benefiting from the vast sums of public money being spent on TA as the cost of homelessness continues to grow.

The headline results from Shelter’s new research are detailed below, alongside a response from its Chief Executive, Polly Neate.

Shelter’s analysis of the latest government data on expenditure reveals:

The billion-pound temporary accommodation industry

  • Of the almost £1.1 billion spent on temporary accommodation by councils in England last year – 86% of it went to private landlords, letting agents or companies.

  • The amount of money being paid to these private accommodation providers has almost doubled in the last five years from £490 million in 2013/14 to £939 million in 2018/19.

  • During the same period the number of homeless households living in private temporary accommodation has increased by 46%, suggesting the charge to councils has risen disproportionately.

  • The way that councils are paying private providers has also changed dramatically, with a massive 121% increase in the use of expensive “nightly paid” private temporary accommodation. This includes the use of emergency B&Bs.

Who is making millions out of rising homelessness?

For the first time, Shelter has been able to show exactly who is benefiting from the ‘lucrative market’ in temporary accommodation (TA). Based on new data gathered through Freedom of Information requests to councils, it has been able to directly link roughly half - £526 million – of the total annual expenditure on TA to individual providers at a local level. The FOI reveals:

  • Four out of the top five temporary accommodation providers who received the most public money last year were private letting agents.

  • Of these, Finefair Consultancy Ltd – who describe themselves as “London’s number one choice for guaranteed rent schemes and property management” - received the most; £16.4 million from nine local councils in England.

  • Finefair was followed by Elliot Leigh (£13.9m from 8 councils), Letting International Ltd (£13.4m from 10 councils), and Theori Housing Management Services (£13.3m from 7 councils)

Polly Neate, chief executive of Shelter, said: “When successive governments cut funding for social housing, they fired the starting-gun on the housing emergency we see today. Had the supply of social homes not dried up, fewer people would be homeless and we would not be wasting over a billion pounds a year on temporary accommodation.

“It is sickening that most of this tax-payer money ends up in the pockets of private landlords and letting agents. As we see in our services, this accommodation is often in dire condition, and is horribly unstable by nature. But with nothing else available, hamstrung councils have got to hand over the cash to try and keep people off the streets.

“We cannot allow these businesses to continue profiting from the housing crisis, while homeless families suffer. With the budget approaching, now is the time for the government to reverse this historic wrong and invest in a new generation of stable social homes.”

Notes to editors:

Top 25 temporary accommodation providers receiving the most money from councils in England in 2018/19:

Top 10 highest paying contracts between councils and individual temporary accommodation providers in 2018/19:

Notes to the editor:

  • The amount spent on temporary accommodation (TA) by councils in England is published by the Ministry of Housing, Communities and Local Government (MHCLG): Revenue outturn housing services, LA drop-down.

  • The 2018/19 annual spend data is published here: Revenue outturn housing services (R04). in 2018/19 councils in England spent £1,086,316,219 on temporary accommodation.

  • The amount spent on temporary accommodation managed or owned by private landlords, letting agents or companies is the amount spent on private managed accommodation leased by local authorities or registered social providers, directly with a private sector landlord, and the amount spent on bed and breakfast accommodation. This increased by 92% from £489,796,000 in 2013/14 to £939,490,205 in 2018/19.

  • The number of households living in different types temporary accommodation is published by MHCLG here: Statutory homelessness live tables, Temporary Accommodation, Table TA1. The number of households living in private temporary accommodation is the number of households living in private sector accommodation leased by local authorities or registered social providers, nightly paid privately managed accommodation and bed and breakfast hotels. We have compared 2019 Q2 data with 2014 Q2 data.

  • The increase in the use of expensive “nightly paid” private temporary accommodation is the increase in the number of households living in nightly paid, privately managed accommodation that is self-contained. This has increased by 121% from 10,100 households in 2014 Q2 to 22,360 households in 2019 Q2.

  • In June 2019 Shelter submitted Freedom of Information (FOI) requests to all local authorities in Great Britain. This aimed to identify spend with individual suppliers of temporary accommodation (TA) at the local authority level. We received data from 140 different local authorities, with the total spend for these authorities in 2018/19 reaching £526,076,932. This means we can map about 50% of expenditure on TA to individual suppliers at a local level.

  • Where data was available on the council’s website, we prioritised downloading and collating results for the financial year 2018/19. This means that although the research does not reflect a complete picture of every TA provider or local authority across the country, the findings are a good indicator of the market at large