More than 210,000 Londoners are currently living in temporary accommodation. For many, what was intended to be a short-term safety net has become a long-term reality. Families are spending extended periods in unsuitable accommodation, councils are facing mounting financial pressures, and the wider consequences are being felt across communities and the economy.
The scale of the challenge means this can no longer be viewed as solely a housing issue. It is also a question of public finances, public services and London’s ability to remain an attractive place to live and work.
Produced by BusinessLDN and CBRE, Fixing London’s Temporary Accommodation Crisis: A new approach to a systemic problem examines how the capital reached this point and explores what a more sustainable approach could look like.
The current system is becoming increasingly reliant on expensive forms of emergency accommodation. As affordable housing supply has failed to keep pace with demand, boroughs have had little to no choice but to turn to costly nightly-paid accommodation, hotels and B&Bs to meet their statutory duties. What was once a temporary response to periods of acute pressure has become embedded within the system.
The consequences are acutely felt in borough budgets. Local authorities are spending ever larger sums to cover the funding gap where arrangements have failed to keep pace with the realities of today’s housing market. Homelessness pressures are consuming resources that could otherwise be invested in other local priorities.
The human cost is even more significant. Families can find themselves living far from support networks, schools and workplaces if placed in out-of-borough locations. Children face disruption to their education and home life, while parents are often left dealing with uncertainty at a time when stability is needed most.
This matters for businesses, too. London’s success depends on its ability to attract and retain people from every background and skill level. When housing becomes increasingly difficult to access, employers face greater challenges recruiting and retaining staff. A housing system under strain can quickly become a constraint on economic performance.
Tackling the problem requires more homes, particularly genuinely affordable housing. The Government’s long-term commitment to increasing affordable housing supply is welcome, but given the scale of need, public investment alone will not be enough to ease the pressure.
Our report looks at the role that institutional investors, including pension funds and insurers, could play in delivering and acquiring homes that can be used for temporary and affordable accommodation. The UK already has a well-established track record of attracting private investment into housing and infrastructure. The task now is to create the right framework to channel more of that capital into helping meet pressing housing needs.
This is not about outsourcing homelessness services or replacing the role of government. Rather, it is about finding ways for the public and private sectors to work together more effectively, increasing supply, providing greater certainty and reducing reliance on the most expensive forms of temporary accommodation.
There are already examples across London where innovative partnerships have demonstrated what can be achieved when long-term investment is matched with clear public sector leadership. The opportunity now is to build on those examples and create the conditions for similar approaches to be adopted more widely.
Doing so will require greater coordination. London’s temporary accommodation challenge does not stop at borough boundaries, yet solutions are often pursued on a borough-by-borough basis. A more joined-up approach could help bring together demand, improve market stability and give investors the confidence needed to commit capital over the long term.
The report sets out a series of recommendations to support that shift, including stronger pan-London leadership through a pan-London Delivery Board, improved data collection and sharing, standardisation of delivery models and reform of the temporary accommodation funding model that has not changed since 2011.
There is no single solution to London’s temporary accommodation crisis. But continuing with the status quo is not an option. The financial costs continue to rise; the social impacts are becoming more acute; and the pressure on local authorities shows little sign of abating.
London now has an opportunity to take a more strategic approach, bringing together government, boroughs, investors and housing providers to create a system that works better for residents, taxpayers and the wider economy. The cost of delaying action will only continue to rise.