Could stock disposals ease the reliance on temporary accommodation?

As councils have seen funding cut they have had to cope with pressure caused by the housing crisis, in particular, ploughing money into temporary accommodation.
Jonathan Bunt Headshot

It is no secret that local authorities have seen their funding cut to the bone over the last decade, notes Beehive Homes’s Jonathan Bunt. This has led to a predicted budget gap of more than £3bn this year, according to the Institute for Fiscal Studies. This seems to be something of raw deal considering the vital public services they provide including social care, schools and, yes, housing.

At the same time, housing associations have had their own financial issues to deal with including the cost of reaching net zero, not least to reduce fuel bills for tenants enduring a cost of living crisis, and dealing with the all-consuming building safety requirements.

As councils have seen their funding cut over the past decade, they have had to cope with sustained pressure caused by the housing crisis, in particular, ploughing money into temporary accommodation.

In fact, English councils spent at least £1.4bn on temporary accommodation in 2020/21. The key question has to be how councils can begin to divert the money spent and time required to manage short term solutions like temporary accommodation to much more effective options that offer far greater value for money and ones that are sustainable in the long term long term?

Not only is this solution costly but it is also often low quality, with a recent Human Rights Watch report claiming that children in London living in temporary accommodation are having their human rights violated. Due to the scale of demand, local authorities often find themselves with very limited choices resulting in the utilisation of accommodation that would not be used in a balanced market.

The NGO recommended the UK government “create a legally enforceable temporary accommodation standards framework in consultation with local authorities, housing providers, third sector partners, and residents and former residents of temporary accommodation”. While this is a welcome idea, the time it would take to implement such a framework would not address the pressing costs faced by local authorities or the current gap in quality endured by some tenants.

Another recommendation was for the Levelling Up, Housing and Communities select committee to conduct an inquiry into the state of temporary accommodation including a review of its scale, cost, effectiveness and use. This again would take some time and it would be better if this inquiry also considered viable alternatives.

While we await the outcomes of these hypothetical solutions, UK’s housing crisis rages on, with 1,180,000 households currently on local authority waiting lists in England. This in turn means more and more families being forced into temporary accommodation – as many as 96,000 in September 2021.

With councils dealing with temporary accommodation costs and housing association development being stymied by the fire safety and decarbonisation agendas, a rethink is needed on how the two sectors can work together towards their common goal – providing affordable housing for those that need it.

Beehive’s work with The Hyde Group and the London Borough of Bromley last year demonstrated one way in which housing associations and councils can collaborate to kill two birds with one stone. Beehive acquired 76 high-quality properties from Hyde to be let to the council at genuinely affordable rates for people who were previously in temporary accommodation. At the end of the agreement the council can buy each property for just £1.

Naturally many housing associations are hesitant about disposing of their assets but the agreement that these will remain affordable properties should comfort the seller that doing so will not undermine their social purpose. Furthermore, the proceeds from the sale will allow housing associations to plug funding gaps left by the competing demands of building safety and net zero targets to maintain their development pipeline to ensure an overall net increase in social and affordable rent homes.

The Chartered Institute of Housing has estimated that moving a family out of temporary accommodation and into social rented accommodation saves around £7,760 per year, freeing up more cash to go towards development. Certainly the appetite for councils to build more is there, with recent figures showing HRA borrowing grew for a third consecutive year since the cap lift to £20bn.

On the other side of the coin housing associations will benefit from the quick cash injection brought by a bulk sale – something associations are already doing with their shared ownership stock. Often landlords are concerned about how stock disposals can be perceived but rarely does the debate look at how this might be done in a responsible way.

While the Human Rights Watch report looks specifically at London, the problems with temporary accommodation are nationwide. Moving away from this dysfunctional system is crucial if local councils and housing associations are to help meet the government’s 300,000 annual housebuilding target. The will has always been there, now is the time to look for solutions.

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