Westminster Council is growing its stock of property to bring down temporary accommodation costs

Westminster City Council has said it can be spending more than £200-a-night housing a homeless family in “high-cost” hotel accommodation as it strives to end the practice by next April. 

Instead, the council is looking to replace expensive placements with its growing stock of owned properties alongside other initiatives in a bid to bring its expenditure down.

Similar to many councils across the country, Westminster has been hit by a severe uptick in homeless presentations and temporary accommodation (TA) costs. Over the last year, the council has reported a 40 percent annual increase in households approaching it for assistance, and a 50 percent increase in placements into TA.

According to a council report, the main factors that are creating the demand are:

• The high rent levels in Westminster and the surrounding areas of London which are significantly above the local housing allowance (LHA) rates and affordability level for many of the people who are now presenting to the council’s Housing Solutions Service (HSS);
• The limited social housing in Westminster, which reduces the options for permanent rehousing and transferring households out of TA;
• The impact of welfare reforms, such as the benefit caps and the level of rent households can afford who claim benefits;
• The increase in homelessness due to the cost-of-living crisis, landlords leaving the private sector market or increasing the costs of rent above the threshold families and individuals can afford.

In September 2024, TA numbers had reached over 3,800 households. The cost of TA over the financial year 2024-25 is budgeted to total £55.5mn.

To try and tackle the issue the council has been purchasing a growing number of properties itself. Since 2014, it has bought and renovated more than 350 homes, and has significantly expanded its 2021-27 programme to add up to 270 additional properties.

The total investment for these purchases is £178.3mn, including an £85mn hike in the budget agreed in 2023-24.

A further 100 hundred properties have been identified as suitable for temporary accommodation on the council’s regeneration sites which can be used for at least two years, after which they will undergo clearance and redevelopment.

At an Audit and Performance Committee meeting earlier this week, Heather Clarke, director of housing needs, told councillors the local authority is looking to “turn off” the supply of high-cost nightly accommodation by the end of the 2024-25 financial year.

The plan, she added, is to instead increase the number of properties it owns directly, alongside potential initiatives such as utilising pension funds to supply more accommodation.

Councillor Paul Fisher (Labour, West End) asked what constitutes an expensive nightly hotel, given the typical prices in London and them being rented at short notice.

He was told this refers to the most costly accommodation, some of which has gone up 200 to 300 percent compared to last year. A spokesperson for the council has since told the Local Democracy Reporting Service (LDRS) that “high-cost” in this context refers to commercial hotels and accommodation widely available on the open market and not solely leased by Westminster or other local authorities.

They added the costs vary according to room location, size and time of year, but that larger accommodation can typically cost more than £200 a night. The spokesperson said: “No placements have been made for several months and households are moving out to alternative accommodation sourced by the council.”

At the meeting, Cllr Fisher also pushed on why the use of expensive hotels had not been discontinued previously. “If we are able to get rid of expensive nightly accommodation at possibly one of the toughest points in our recent living history in terms of temporary accommodation demands, why weren’t we able to do it sooner?” he asked.

Sarah Warman, strategic director housing and commercial partnerships, said there had been a “short-term nature” in some of the council’s work in this area, although the recent surge in presentations meant there has been a need to simply get people into accommodation.

Cllr Fisher said it appeared as if there had been a “Grenfell-type scenario” in which councils and the wider industry had woken up to a systemic issue. Clarke responded by clarifying the council had always used high-cost accommodation, but that issues such as the rising prices in the private sector meant it had become a growing part of the local authority’s portfolio.

“I think we all feel now, the balance of our portfolio, owning more, actually puts us in a better place for if that market was to change again significantly, as it is and it has,” she said.

The papers presented to the committee also highlighted how almost a quarter of households placed in temporary accommodation by Westminster Council have been in the same property for more than five years.

Polly Neate, chief executive at homeless charity Shelter, previously told the LDRS that overpriced private rentals and a lack of affordable social housing “are pushing families into homelessness and insecure temporary accommodation”.

Westminster Council, Audit and Performance Committee, Tuesday 22 October 2024.

Additional reporting by Linus Rees.