London is often held up as the jewel in Britain’s crown. Yet beneath the city’s gleaming skyline lies a less celebrated reality: ‘temporary housing’ that is anything but. Across the capital, families in need are housed by local councils in hotels, hostels and B&Bs at extraordinary expense. What is meant to be a short-term emergency fix has calcified into a way of life for tens of thousands, sometimes for years. It is expensive, unsuitable and corrosive, to both family life and the public purse.
Councils across England spent £2.29 billion on temporary housing last year, up nearly 30 per cent in only twelve months. Half of that went on the most unsuitable forms of housing imaginable, nightly-paid B&Bs and hostels, the sort of places families are meant to avoid, not endure.
Councils across England spent £2.29 billion on temporary housing last year, up nearly 30 per cent in only twelve months
London boroughs, home to just 16 per cent of the population, accounted for about 40 per cent of that sum – around £1 billion, roughly £4 million a day. Borough treasurers are staring at a projected £330 million overspend for 2024-25, turning a budgetary blackhole into an annual expectation.
Behind these figures are people: 183,000 Londoners now live in temporary housing, one in every fifty residents of the city, a full two per cent. That includes nearly 90,000 children, roughly one per London classroom. According to recent data there were 19.9 households living in temporary accommodation per 1,000 households in London, compared with 2.8 households per 1,000 in the rest of England. The highest borough, Newham had an astonishing 57.7 households per 1000.
So why not place families in cheaper areas nearby, but outside of Central London? Councils are not strictly prohibited from placing families outside their boroughs, but Section 208 of the Housing Act 1996 and the Homelessness Code of Guidance strongly encourage keeping placements local ‘so far as reasonably practicable’.
The reasoning is understandable. Children need schools, families need jobs and community support. But in practice, this often traps families in high-cost London accommodation for years.
When introduced, the obligation to provide temporary housing served as an emergency measure, a roof for a few nights while a proper home was found. But over decades, the system has ossified. Such abodes have become quasi-permanent for those with no other options.
This is not only costly, but socially caustic. Children grow up with instability, families lose community networks, and the very notion of ‘home’ becomes blurred. It is tempting to focus solely on the numbers. But the human impact is stark.
Imagine a child cycling to school from a hotel, or parents trying to work while living out of a suitcase in a hostel. These are not just isolated anecdotes; they are realities for tens of thousands. Temporary housing, once emergency provision, has become a parallel housing system that fails both those it serves and the taxpayers who fund it.
Relocation would be no panacea, however. The politics of placement is delicate. Councils fear community backlash and legal challenges. Even so, the reluctance to disperse families reinforces the high-cost trap.
The opportunity cost of all of this is staggering. The money London spends on temporary accommodation could have instead been spent on building permanent housing in both the capital and across the country. Yet the system continues, and the cycle endures, fuelled by well-meaning legislation and the inertia of local politics.
Why has London, become such a magnet for temporary accommodation expenditure? The story is the same as across the rest of the country but turned up to 11.
On the supply side, we have had decades of underbuilding both private and social housing due to overregulation, leading to chronic shortages. This failure is illustrated starkly by London boroughs buying back thousands of former council properties in recent years, originally sold under Right to Buy. On the demand side, London’s population pressures have surged, from immigration to demographic change and shrinking household sizes, driving up want for limited housing. This is visible even on the streets.
In Westminster, only about 43 per cent of those without a home are UK nationals; another 43 per cent hail from the EU, with the balance from further afield. Across London as a whole, people from Central and Eastern Europe make up nearly a third of the rough sleeping population, and the figure is likely higher once those of ‘unknown’ nationality are included. Compared with the rest of England, London’s homeless population is more international, underscoring how migration pressures intersect with – and can intensify – the city’s already chronic accommodation issue.
Yet successive government’s policies have focused on supporting buyers rather than build enough homes to meet need, driving up both rents and prices. The result is perverse. Boroughs spend heavily to maintain a status quo that achieves neither stability for families nor efficiency for taxpayers. Cash continues to pour in, propping up the system.
Breaking this cycle will require political courage. In the short term, Parliament must revisit legislation that restricts councils’ ability to place families in cheaper nearby areas. Longer term, it must address the endless subsidising of demand at the expense of increasing supply. Even modest reform could stretch scarce resources and offer families greater stability. Our ongoing national debate about housing is incomplete if it ignores London’s temporary housing anomaly: a city where temporary has become permanent, and crisis has become routine, all at a great cost to the taxpayer and great social cost to the families trapped in an endless housing limbo.
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