In the face of worsening pressures, boroughs respond to ‘hugely welcome’ housing announcements

London Councils has welcomed the housing package announced by the government, which includes £500m in new funding for the Affordable Homes Programme, a five-year social housing rent settlement, and allowing local authorities to keep 100% of the receipts generated by a Right to Buy sale.

Cllr Grace Williams, London Councils’ Executive Member for Housing & Regeneration, said:

“With London’s homelessness emergency posing the biggest threat to council finances in the capital, these announcements are hugely welcome news.

“Increasing investment in the Affordable Homes Programme and allowing councils to retain 100% of Right to Buy receipts will help boost the construction of much-needed social and affordable homes. Reducing the Right to Buy discounts will also better protect existing and newly-built council homes – a crucial resource in boroughs’ efforts to support families at the sharp end of the housing crisis.

“The government is right to recognise the importance of putting social housing finances on a sustainable footing and the proposal for a new five-year rent settlement is a positive step. London boroughs face a black hole of £700m in their social housing budgets over the next four years as the costs of maintenance, repairs, and vital safety improvements outpace boroughs’ rental income.

“We will be making the case for a 10-year settlement in the forthcoming consultation, alongside a review of the existing debt settlement for Housing Revenue Accounts. These further support measures would ensure long-term stability and maximise boroughs’ ability to drive up housebuilding, which is so crucial to the government’s missions.”

Earlier this year, London Councils shared analysis warning of “mission impossible” on social housing amid a £700m “black hole” in boroughs’ Housing Revenue Accounts.

The cross-party group has recently published a report on London’s homelessness emergency, highlighting that temporary accommodation pressures in the capital have reached a new record high.

To tackle the worsening housing and homelessness challenges, London Councils is also calling for the following national policy priorities:

Double Homelessness Prevention Grant funding. Local authorities play a vital role in supporting struggling households to avoid homelessness. Councils require an emergency funding increase to ensure local services have the resources needed in the face of rising levels of demand for support.

The current level of overspend on borough budgets suggests a doubling of Homelessness Prevention Grant funding is necessary. London boroughs received £157m from the government through this grant in 2024-25.

Make the increase in Local Housing Allowance rates a permanent measure. Research published by London Councils shows only 5% of London’s private rental listings in the capital are affordable to households relying on Local Housing Allowance.

Boroughs are calling for the increase in LHA rates to become a permanent measure, with LHA rates updated annually to track market rents and help ensure adequate support for low-income tenants in the private rented sector.

Remove the January 2011 cap on Local Housing Allowance payable for temporary accommodation in Housing Benefit subsidy. This is the amount of money local authorities can claim from the government for their temporary accommodation costs.

Currently the subsidy has been frozen at 2011 rates – even though temporary accommodation has become significantly more expensive over the past 13 years. London Councils’ data from 24 boroughs shows a gap of more than £96m in 2023-24 between the cost of providing temporary accommodation and what councils can recover from government through the housing benefit subsidy for temporary accommodation.

The ‘subsidy gap’ is a priority concern for London boroughs, especially as they increasingly rely on relatively high-cost temporary accommodation options in B&Bs and commercial hotels. Lifting the cap would better reimburse boroughs for their temporary accommodation costs.