Inside Housing - Home - Are there different financial models thatcould tackle the temporary accommodation crisis?

By Janani Paramsothy, Associate Director at Newbridge Advisors

The Growing Crisis in Temporary Accommodation

Local authorities across the UK are grappling with an unprecedented temporary accommodation crisis. With over 100,000 households in England alone living in temporary housing—a figure that has risen by 89% since 2010—the strain on council budgets and resources is reaching breaking point.

The question isn’t just how to house people, but how to fund it sustainably. Traditional models are buckling under demand, leaving councils scrambling for alternatives. Could innovative financial strategies offer a way forward?

Why Current Models Are Failing

1. Skyrocketing Costs

Local authorities spent £1.7 billion on temporary accommodation in 2022/23—a 62% increase in just five years. With nightly-paid B&Bs and hotels absorbing much of this budget, the system is financially unsustainable.

2. Limited Supply of Social Housing

Decades of underinvestment in social housing have left councils reliant on expensive private rentals. The Right to Buy scheme has further depleted stock, with only 6,566 social homes built in 2022/23—far below demand.

3. Complex Homelessness Legislation

The Homelessness Reduction Act (2017) expanded councils’ duties, but without adequate funding, many struggle to meet obligations. Discharging duties often means costly temporary placements rather than permanent solutions.

Alternative Financial Models Worth Exploring

1. Public-Private Partnerships (PPPs)

PPPs could unlock investment in purpose-built temporary accommodation, reducing reliance on expensive nightly rates.

• Example: Some councils are partnering with institutional investors to develop modular housing.
• Benefit: Lower long-term costs compared to B&Bs.

Internal Link: Learn how RSLs are innovating in this space.

2. Social Impact Bonds (SIBs)

SIBs allow private investors to fund homelessness interventions, with returns tied to outcomes like tenancy sustainment.

• Case Study: The Greater Manchester Homelessness SIB reduced rough sleeping by 40% in its first phase.
• External Resource: Read the UK government’s guide to SIBs.

3. Council-Led Housing Companies

Some authorities are setting up wholly-owned housing companies to develop affordable homes.

• Success Story: Nottingham City Homes has delivered 4,000+ affordable units.
• Internal Link: Explore supported housing models that work.

4. Community Land Trusts (CLTs)

CLTs keep housing permanently affordable by separating land ownership from property ownership.

• Example: The London CLT has developed 60+ homes at sub-market rents.
• External Resource: The National CLT Network offers guidance.

Key Takeaways for Housing Professionals

1. Diversify Funding Sources – Relying solely on council budgets is unsustainable.
2. Prioritise Prevention – Invest in early intervention to reduce long-term costs.
3. Collaborate Across Sectors – NHS, charities, and private investors can share the burden.

Internal Link: Discover more resources for housing professionals.

A Call to Action: Join the Solution

The temporary accommodation crisis won’t fix itself—it demands bold, innovative thinking. At Social Home, we’re committed to connecting housing professionals with the tools and partnerships needed to drive change.

Ready to transform your approach? Sign up for Social Home today and access cutting-edge solutions for sustainable housing management.

External Resource: For policy updates, visit the UK Homelessness Reduction Act guidance.

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About the Author: Janani Paramsothy is an Associate Director at Newbridge Advisors, specialising in social housing finance. Follow her insights on our blog.