Councils are spending billions on temporary housing, but behind the scenes, some private landlords and hotel owners are profiting at the expense of vulnerable families. What does this mean for property professionals, policymakers, and ethical investors?
England’s homelessness crisis is deepening and behind the growing number of families stuck in temporary accommodation, an uncomfortable truth is emerging. Private landlords and hotel operators are cashing in, charging local councils inflated rates for often substandard housing.
New investigations have revealed that some landlords are earning up to 60% above market rates, with little oversight on the quality or safety of the accommodation provided. Councils, desperate to house vulnerable people, are paying billions each year. Meanwhile, at least 74 children living in temporary housing have died in the past five years.
The situation is complex, emotionally charged, and politically sensitive. But for anyone involved in the property industry, it also highlights important questions about responsibility, opportunity, and the future direction of housing policy.
In this article, we dig deeper into the facts, explore the drivers behind this hidden economy, and offer insights for property professionals who want to understand the risks and responsibilities associated with this side of the market.
The Scale of England’s Temporary Accommodation Crisis
According to government data, over 100,000 households in England are currently living in temporary accommodation. This figure includes families with children, single adults, and vulnerable groups such as care leavers and those fleeing domestic violence.
In financial terms, councils spent more than £2.1 billion on temporary housing in the last financial year alone. This represents a 78% increase over the past five years.
Some of the spending has gone towards reputable providers who deliver good-quality accommodation and supportive environments. But in many cases, councils are being forced to place families in privately owned properties or budget hotels, where costs are high and standards are variable.
The result is a fragmented and often unregulated ecosystem where landlords can name their price, knowing that councils have limited alternatives.
How Private Operators Are Profiting
The profitability for some private landlords and hotel owners is stark.
- Some providers are charging councils nightly rates that equate to double or triple standard market rents.
- In many cases, properties are in poor condition, with issues such as damp, overcrowding, unsafe wiring, and inadequate sanitation.
- Inspections and oversight are minimal, due in part to resource constraints within council housing teams.
Investigative reports have shown that certain landlords are operating portfolios of multiple temporary housing units, receiving millions of pounds in council payments annually. Some hotels, originally struggling with occupancy after the pandemic, have shifted their business models entirely towards housing vulnerable families at premium rates.
For ethical landlords, these revelations are concerning. They paint the industry in a negative light and risk increased regulation that could affect all property owners, regardless of practices or intentions.
Why Councils Are Trapped
Councils are not willingly paying excessive rates. They are caught in a systemic trap.
Several factors are at play:
- Lack of affordable housing stock: Years of underinvestment in social housing have left councils with few properties of their own to allocate.
- Rising homelessness: A combination of eviction notices, domestic abuse cases, and asylum pressures have dramatically increased demand for emergency accommodation.
- Legal obligations: Councils have a statutory duty to house certain vulnerable groups, regardless of available supply.
- Funding pressures: Central government funding for temporary accommodation has not kept pace with actual costs, forcing councils to make difficult choices.
In short, councils often have little choice but to pay whatever private providers demand in order to meet their legal obligations.
The Human Cost
Behind the financial headlines is a devastating human story.
- Children growing up in single-room hotel accommodations with no access to play areas or kitchens.
- Families moved repeatedly, sometimes dozens of times in a year, disrupting education, employment, and health care.
- Reports of unsafe living conditions leading to physical injury, mental health deterioration, and even deaths.
Temporary accommodation is intended to be just that temporary. Yet many families are trapped for months, even years, in unsuitable housing.