BusinessLDN and CBRE set out action plan to help reduce £2 billion annual spending on ‘broken’ temporary accommodation system failing Londoners, councils and the city’s economy
Moving the majority of the nearly 40,000 London households living in the most expensive forms of temporary accommodation, including hotels and B&Bs, to high-quality homes backed by institutional investors could save the city’s councils over £500 million a year.
That’s according to the latest report from the city’s leading business campaign group BusinessLDN and global real estate advisor, CBRE. It follows the announcement of new pledges from the Government to end rough sleeping and accelerate the building of affordable homes.
The report, ‘Fixing London’s temporary accommodation crisis: a new approach to a systemic problem’, sets out how the current framework is structurally broken. London boroughs are collectively spending £5.5 million a day, or more than £2 billion annually, to meet their legal obligation to provide accommodation for those who are homeless.
In total, more than 210,000 Londoners – including over 100,000 children – are housed in temporary accommodation. The number of households placed in temporary accommodation in London has risen since 2011, reaching a record total of 76,020 in March 2026. Due to a lack of supply of high-quality affordable homes, much of the temporary accommodation used by councils is unsuitable and expensive.
The crisis is putting a huge strain on local finances, diverting funding away from other services that support growth and contributing to some boroughs needing emergency financial support from central government.
The report details how a new pan-London approach to managing temporary accommodation can unlock greater institutional investment to build more affordable homes. This would reduce public spending and ensure Londoners are housed in better-quality accommodation. It spotlights examples of where individual boroughs are already channeling this kind of investment into affordable housing to positive effect.
The report also highlights the affordability of investor-backed housing compared to emergency temporary accommodation, such as hotels and B&Bs. The nightly cost of such accommodation to a London council typically ranges from £80-£180, whilst the equivalent cost for premises facilitated by institutional investors generally stands at £30-£60 per night. Moving the majority of the near 40,000 London households currently in the most expensive forms of temporary accommodation into investor-backed premises could reduce the city’s public spending by £500m.
John Dickie, Chief Executive at BusinessLDN, said: “London’s broken temporary accommodation system means councils are spending more than £250m a year on housing families in poor-quality hotels and B&Bs alongside a further £1.7bn on other costly forms of nightly paid accommodation. Our analysis shows that institutional investors stand ready to invest in high-quality affordable homes which will be better for residents and cheaper for taxpayers, provided the right frameworks are in place. This would save boroughs upwards of £500m pounds a year and improve the lives of Londoners that rely on temporary accommodation.”
Tom Copley, Deputy Mayor of London for Housing and Residential Development, said: “London is at the sharp end of a national homelessness crisis that has been decades in the making. It is unacceptable that on average one child in every London classroom is homeless in temporary accommodation, and that many families are forced to live in unsuitable hotel rooms and B&Bs for months or even years. This emergency is also costing Londoners dearly, with London boroughs spending £5 million every day on temporary accommodation. That is one reason why City Hall launched the London Ending Homelessness Accelerator Programme alongside London Councils, backed by a £3.5 million investment to pioneer faster, innovative approaches to delivering urgent housing. This report from BusinessLDN and CBRE rightly recognises the need for sustainable, stable and high-quality homes. We will continue working closely with the Government to tackle rough sleeping at its root and build a better, fairer London for everyone.”
Temporary accommodation is intended as a stop gap for those who are homeless whilst long-term housing is found. It encompasses homes owned by boroughs and housing associations, premises let from private landlords, and hotels and B&Bs in emergency circumstances.
Of the £2 billion that London councils spent on homelessness services in 2024 – 25, an estimated £740 million was not covered by central government funding for temporary accommodation, with the rates determining this funding frozen since 2011.
To drive greater public-private collaboration around investment in affordable homes on a city-wide basis, BusinessLDN and CBRE are calling for the creation of a pan-London Temporary Accommodation Delivery Board to co-ordinate action between boroughs, the Greater London Authority, central government and institutional investors.
The new Delivery Board would ensure organisations across the capital are working together to tackle a shared temporary accommodation crisis, rather than leaving individual boroughs to try and operate within a broken system which sees them competing against one another to secure housing which – in turn – drives up prices and leads to poor outcomes for residents.
The role of the new Delivery Board would include standardising public-private models for funding projects and serving as a single point of contact for delivery partners. This would replace a system which sees institutional investors trying to navigate 33 local authorities with different rules and approaches.
The London Assembly’s latest Affordable Housing Monitor shows that the capital’s affordable housing stock increased by a net 8,184 homes over the 2024 – 25 financial year against an estimated requirement of 45,500.
John Percy, Senior Director, UK Public Sector, at CBRE, said: “It is no secret that boroughs across London are facing significant financial pressure, and rising demand for temporary accommodation is only adding to this challenge. Our findings show addressing this will require closer collaboration between the public and private sectors. There is strong institutional appetite to invest in high-quality affordable and temporary accommodation, but our report finds that unlocking that capital at scale will require greater coordination and a more consistent delivery model.”
The report sets out six recommendations:
Establish a pan-London Temporary Accommodation Delivery Board. The body would bring together boroughs, the Greater London Authority, central government, Homes England and the private sector to strengthen strategic co-ordination across the city and create a single point of contact for investors.
- Centralise procurement to boost purchasing power. The new pan-London board would allow capital to be raised at scale centrally for boroughs to deploy locally across the city. Councils would retain control over placements, housing management and resident support whilst benefiting from collective purchasing power, standardised structures and lower costs.
- Establish a comprehensive data platform for monitoring temporary accommodation requirements across the capital. Such an analytics tool would provide the shared intelligence needed to coordinate investment at a pan-London level.
- Standardise public-private investment models that meet the needs of institutional capital. This would provide clarity around which existing models for raising funds can be used across different boroughs, reducing transaction costs and speeding up the rate at which deals can be done.
- Enable national underwriting of long-term lease obligations to provide the certainty that private capital needs. This would help to ensure that the financial position of an individual borough does not determine whether it can invest in the homes that residents require. It would enable public credit to be used more intelligently to leverage in private investment more equitably across London.
- Update the central government temporary accommodation subsidy model to reflect current rents. The caps on funding made available to councils to cover temporary accommodation costs have not been updated since 2011, whilst the cost of housing in London has soared over that time. Updating this formula to reflect market realities would help to make more schemes viable and give investors the certainty they need to back new projects.