Council spending on temporary accommodation in England has risen by a quarter in the past year, reaching £2.8 billion in 2024/25, according to recent government figures.
There are now more than 131,000 homeless households living in temporary accommodation in England, for which councils cover housing benefit costs upfront before being reimbursed by the Department for Work and Pensions.
In Wales, more than 10,900 people are currently in temporary accommodation, with council spending on homelessness up from around £13 million in 2016/17 to £101 million in 2025/26 – far outpacing local government funding and forcing councils to divert money from other vital services, according to the Welsh LGA.
The LGA has also warned that the current system leaves councils in England out of pocket – by £260 million this year, up by a third from last year, with a total gap of £1 billion over the past six years.
Under existing rules, the amount local authorities can claim back is capped at 90 per cent of local housing allowance (LHA) rates from 2011, while they must pay landlords at current market rates.
Cllr Tom Hunt, Chair of the LGA’s Inclusive Growth Committee, said: “These figures show how the temporary accommodation crisis facing councils is only worsening. As more people turn to their council for help, local authorities are having to stretch budgets further.
“Government needs to update reimbursement rules so they reflect today’s housing costs, and restore LHA rates to at least the 30th percentile of local rents beyond 2025/26.”