London is spending an estimated £4 million each day on temporary accommodation for homeless residents, a new analysis reveals, sparking urgent appeals for support from the government in

the upcoming Budget. The London Councils organization, which represents the capital's boroughs across political lines, reports that over 183,000 Londoners are currently homeless and housed in temporary accommodation organized by local authorities.

This figure marks an unprecedented level of homelessness in London—roughly one in every 50 Londoners. Of those in temporary housing, nearly 90,000 are children, underscoring the need for sustainable solutions.

Rising Demand and Escalating Costs

The cost of temporary housing in London has surged, with a 662% rise in families being placed in bed-and-breakfast accommodations by boroughs over the last two years alone. Moreover, rough sleeping has risen by 58% since 2014, adding to the strain on local resources.

Ahead of Rachel Reeves' Budget announcement on October 30, London Councils has proposed several measures, including a request for doubling the Homelessness Prevention Grant funding. The organization explains that this funding is critical for councils to support struggling households and prevent homelessness, especially as demand for these services grows. London boroughs received £157 million through this grant in 2024-25, but officials argue that more is needed to meet current needs.

Key Recommendations for Sustainable Support

Increase and Sustain Local Housing Allowance (LHA) Rates: Research by London Councils shows that only 5% of private rental listings in London are affordable for households relying on LHA. Boroughs are urging the government to make recent increases to LHA rates permanent, with an annual update to align with market rates and better support low-income tenants in the private sector.

Address the 2011 Cap on Housing Benefit Subsidies: The cap on housing benefits for temporary accommodations, frozen since January 2011, fails to reflect today’s higher costs. According to London Councils, data from 24 boroughs shows a funding shortfall of more than £96 million between actual temporary accommodation costs and what councils can recover through housing benefit subsidies.

These recommendations aim to address the growing costs and challenges associated with housing support in London, urging the government to prioritize homelessness prevention and make adjustments that align with today’s housing market realities. Photo by Philafrenzy, Wikimedia commons.