Temporary Accommodation, Homelessness and Private Landlords, End of the Affair

Temporary Accommodation, Homelessness and Private Landlords, End of the Affair

Here are some staggering figures for you.

There are around 170,000 people in London who are homeless and in temporary accommodation – which is about one in 50 Londoners and one in 23 kids, (around 84,000 children).

The number of households who are entitled to homelessness support from a London borough increased by 15% between 2022 and 2023.

Meanwhile there has been a 780% increase in homeless families placed in B&B accommodation beyond the legal six-week limit. The actual numbers were 1,287 families in B&B type accommodation in April 2023 compared to 146 a year earlier.

A report by Savills and the LSE commissioned by London Councils showed a 40% decline in the number of properties available for private rent since March 2020.

Landlords are increasingly exiting their properties from use as temporary accommodation, a particular problem in London. This means then that as the local authorities run out of private rent alternatives, they are then forced to put more families and their kids in B&Bs, which is a far less suitable alternative and much more expensive.

London Councils research shows that that the boroughs in London are spending £720 million a year on temporary accommodation, an increase of 16% in just a year.

This big reason is what’s happened to Local Housing Allowance (LHA), which eligible households get as part of their housing benefit. This has been frozen since 2020 despite private rents rising very fast since then, especially in London.

The London Councils say LHA should be set at 30% of local market rents – a figure it was marked at in the past.

They also want the government to put up taxpayer cash to buy accommodation sold by private landlords – 40% of all homes listed for sale in London in 2022 were previously let by a landlord.

And they want to increase the Homelessness Prevention Grant and Discretionary Housing Payments, which has been frozen at 2022/3 levels.

So, what can we conclude from this?

Well, the government does dumb stuff, like freezing LHA levels despite rising rents and somehow thinks that was not going to lead to landlords exiting this end of the market.

Then, of course, there are the various tax increases that have hit landlords hard over recent years and big increases in the amount of regulation. It all takes its toll of the type of landlords who are not good at this business.

So, they exit the market or at least exit the least profitable bits, like letting to tenants on housing benefit or in temporary accommodation.

At least the government has recently rowed back on the drive to get all private rented properties to EPC grade C within 3 years, this has been replaced by no deadline, though when Labour gets in, that will probably change back once more.

The facts show that you can only squeeze markets so much. There is a particular failure at the lower end of the market, which is propped up by funding from central government, i.e., taxpayers, as this article has showed. The figures are staggering – both the LHA payments and the additional grants.

Most non landlords have no idea of the extent of this – and the extent to which they are propping up a failed housing market with their tax pounds.

And so, it goes on, hidden in plain sight.

If you are a landlord, just make sure you buy in the right area and buy the right kind of property. We can help with this. There are lots of great opportunities out there, especially now, but the large number of great properties to buy at great prices will reduce soon. House price drops already appear to be close to bottoming out, along with interest rate hikes.


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One comment

  • By enforcing punitive rules on landlords like “nut zero” based on ideological science coupled with singling out landlords for “special tax” treatment, it’s no wonder the supply of suitable private rental property has contracted. Landlords are responding to the distortion of the market and the politicians at all levels have ignored similar problems unfolding on the continent, especially in Berlin. This is before the issue of uncontrolled immigration is factored in which adds further pressures.

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