UK Councils Spend Record £1.26bn on Temporary Housing in 2024-25

UK councils spent a record £1.26 billion on temporary accommodation in 2024-25, up more than tenfold since 2011-12. The Local Government Association released analysis on July 9 showing the surge is draining budgets and preventing investment in permanent housing. The LGA is demanding the next Prime Minister fix the government reimbursement system, which caps council claims at 90% of Local Housing Allowance rates set in 2011.

How spending spiralled in 13 years

Council expenditure on temporary accommodation increased by 1,077 per cent in real terms between 2011-12 and 2024-25, according to new LGA analysis released July 9. Councils spent £6 billion total over the 13-year period. More than a third of that total—£2.2 billion—was spent in just the last two years, 2023-24 and 2024-25, showing the crisis is accelerating.

A record 134,210 households now live in temporary accommodation in England, up 5% in a single year. London accounts for the largest share of spending, but other regions are seeing increasingly rapid rises from lower starting points.

Why the reimbursement system is broken

While households receive their full housing benefit entitlement, councils can only reclaim costs from the Department for Work and Pensions at up to 90% of Local Housing Allowance rates frozen since 2011. This gap means councils absorb increasing financial losses, which diverts money from other critical services like social care, bin collection, and road maintenance.

The LGA is calling on government to uprate the temporary accommodation subsidy to 90% of prevailing LHA rates and ensure Local Housing Allowance rates keep pace with the bottom 30% of local rents. The organisation warned the current system is not working and is preventing councils from investing in prevention and new housing.

What councils are asking from the next government

The LGA released a new Homelessness Position Paper on July 9 outlining demands for long-term reform. Councils need government commitment to support rising temporary accommodation costs, flexible and stable funding aligned with prevention goals, and cross-departmental targets to hold stakeholders accountable for preventing homelessness.

Councillor Eamonn O’Brien, chair of the LGA, said temporary accommodation is a huge leak in council budgets that needs patching quickly. The crisis is one reason councils face a £7 billion funding gap over the next three years and cannot invest in the housebuilding programmes they have pledged.

Individual councils finding local solutions

Some councils are taking action independently. Gloucester City Council’s temporary accommodation acquisition programme is set to deliver 30 additional bed spaces for single people and couples, plus 9 family units, saving the council £400,000 while providing self-contained housing that improves resident wellbeing compared to hotel or hostel placements.

Ipswich Borough Council reported in July that housing finances performed well in 2025-26, increasing reserves to £6.967 million, though it noted ongoing pressure from rising demand for temporary accommodation services.

Final Thoughts

UK councils face an unsustainable crisis: spending on temporary housing has exploded to £1.26 billion annually while the government reimbursement system remains frozen at 2011 rates. Without urgent reform from the next Prime Minister, councils warn the squeeze will worsen and prevent investment in permanent housing and homelessness prevention.

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