When the Estate Has to Do the Heavy Lifting on Temporary Accommodation

By Kane Lennon, Senior Consultant, Local Government Property Consultants (LGPC) (December 2025)

Councils have always known that temporary accommodation is expensive. What has changed is the speed and scale at which those costs have risen, and the extent to which they now threaten the wider financial stability of local government. Housing people in crisis is an unavoidable legal duty, but it has become one of the most significant and unpredictable pressures councils face.

The national picture makes this clear. According to the Local Government Association, councils in England spent around £2.85bn on temporary accommodation in 2024/25, a rise of roughly a quarter in just a year. The pressures are even more pronounced in the capital. Independent analysis by LSE Consulting estimates that London faces a £740m annual shortfall in temporary accommodation costs, equivalent to £202 per household or around 11% of all council tax collected in the city. Earlier modelling by London Councils showed the intensity of the crisis even more starkly, with nine boroughs alone spending around £5.5m every day on homelessness and temporary accommodation. None of these trends are slowing. Several authorities have already warned that temporary accommodation is pushing them towards effective insolvency.

Behind these numbers are real families living in B&Bs, converted offices and short-term lets, often for far longer than intended. The human consequences are clear. But the financial reality is equally stark: every pound absorbed by nightly paid rooms is a pound that cannot be invested in prevention, in improving supply, or in stabilising other essential services. Councils are trapped in a cycle where the estate sits largely outside the temporary accommodation conversation, even though it is one of the most powerful tools available.

If the current approach is unsustainable, the question becomes what councils can realistically do differently. This is where estate strategy needs to move from the periphery of policy discussions to the centre. Most debates about temporary accommodation take place within housing teams, focused on procurement, allocations, landlord incentives or regulatory pressures in the private rented sector. All are important, but they overlook a fundamental point: councils collectively own a substantial and diverse estate, and that estate can be used far more proactively.

For many authorities, the starting point is simply looking again at what they already hold. Across the country there are surplus or under-used buildings that are expensive to maintain but difficult to dispose of quickly. There are small infill sites, awkward plots and former service buildings that may have limited commercial value but strong potential for smaller-scale council-led housing or modular development. And there are assets such as former offices, care facilities or hostels which, with the right investment, could provide decent, self-contained temporary or move-on homes rather than relying almost entirely on hotel rooms. None of this is easy, and none of it is instant. But it is the type of long-term work that allows the estate to carry more of the burden instead of the revenue budget.

The challenge, of course, is timing. Temporary accommodation costs escalate rapidly while estate work is slower, more technical and dependent on capital availability. It is tempting to focus entirely on the next quarter’s overspend and push estate decisions into the background. Yet all the national projections point in the same direction: without a shift in approach, the numbers in temporary accommodation and the associated costs will continue to rise. Relying indefinitely on nightly paid provision is not a neutral choice; it locks councils into a pattern of spending that becomes structurally embedded.

A more deliberate approach requires housing, finance and estates to work together in a way that remains surprisingly rare. When councils review their assets, the starting assumption is often disposal or capital receipts. Those will always have a role, especially in the current financial climate. But alongside that, there is a strategic question worth asking: which assets, if treated differently, could help reduce future temporary accommodation pressures? For some areas, that will mean releasing sites for new permanent affordable housing. For others, it may mean creating small-scale, high-quality temporary or move-on accommodation directly on council land, even if only a handful of units at a time.

There are already examples of councils using their estate in this way with positive results. Where authorities have invested in their own emergency or temporary units—whether through repurposing existing buildings or commissioning new small schemes—they have been able to reduce their reliance on nightly paid accommodation, keep households closer to their communities and achieve better outcomes at a lower long-term cost. These projects rarely make headlines, but they quietly shift the council’s role from perpetual purchaser of temporary accommodation to active provider of solutions.

None of this replaces the need for national action on the structural drivers of homelessness, or the need for a long-term funding settlement that recognises the true scale of demand. Councils cannot control the wider housing market, nor can they eliminate the pressures created by rising rents and limited supply. But they can choose whether their estate is part of the solution or simply another cost centre. One path leads to deeper financial strain and further instability. The other requires more effort, but offers a credible route to a position where the estate reduces, rather than amplifies, the pressure of temporary accommodation.

Temporary accommodation is no longer a side issue. It is one of the clearest tests of whether local government can remain financially sustainable while meeting its legal and moral responsibilities. Councils will need every tool available to them. Their estate should be one of the most powerful.

About the Author

Kane Lennon is the founder and senior consultant of LGPC (Local Government Property Consultants), established in September 2024. LGPC forms part of the award-winning consultancy team recognised as Consultancy of the Year 2025, specialising in innovative estate strategy, asset rationalisation, surplus land release, and housing-focused advisory for councils and education providers across England.