Landlord News

The housing cost that almost nobody expected.

In 2018, Property118 contributor, the now late David Knox FCA, writing under the pseudonym Appalled Landlord, examined a statistic that seemed extraordinary at the time.

Manchester City Council’s spending on temporary accommodation had risen from roughly £2.25 million to almost £13 million in just five years.

The increase, around 478%, suggested something unusual was happening in the local housing system.

At the time it appeared to be a regional issue. Manchester was struggling with rising homelessness pressures and expensive short-term accommodation placements, but the numbers David highlighted now look less like an anomaly and more like an early warning.

Across England, councils are now estimated to be spending close to £3 billion every year on temporary accommodation for homeless households.

More than 110,000 households are currently living in temporary accommodation, the highest figure recorded since comparable statistics began.

What once appeared to be a local financial problem has become a national housing crisis, and looking back at David Knox’s article today, one conclusion is difficult to ignore; he saw the trajectory years before most policymakers noticed it.

Looking back at David Knox’s warning

Looking back at David Knox’s work today, it is difficult not to notice how often his analysis identified trends before they became widely recognised. In article after article he examined official statistics, local authority spending and housing policy decisions, often highlighting consequences that were still years away from becoming visible nationally. In hindsight, some readers have joked that he was the “Nostradamus of the private rented sector”. What he was actually doing was something far simpler, and far more valuable. He was reading the data carefully and asking where the trajectory might lead.

How temporary accommodation became a multi-billion-pound system

To understand how these costs escalated so quickly, it is necessary to look at how temporary accommodation actually works in practice.

Local authorities have a statutory duty to provide accommodation for households they accept as homeless and in priority need. When councils do not have sufficient social housing available, they must secure accommodation elsewhere.

In many areas this increasingly means relying on the private sector. Councils place households in privately rented properties, hostels, converted buildings or, in the most expensive cases, hotels and nightly-paid accommodation.

These arrangements were originally intended to be temporary solutions while permanent housing was secured. Over time, however, shortages in both social housing and affordable private rentals have meant that temporary placements often last far longer than originally intended.

What began as a short-term safety net has gradually evolved into a large parallel housing system operated by local authorities.

The financial consequences are substantial. Nightly-paid accommodation can cost councils several times more than equivalent long-term housing, particularly in high-demand urban areas where property prices and rents are already elevated.

Once households enter temporary accommodation, councils frequently struggle to move them on because there are too few suitable permanent homes available.

The result is a system where both the number of households and the duration of placements continue to rise.

Why councils became trapped in the system

One of the less widely understood aspects of temporary accommodation is the way it is funded. Local authorities receive housing benefit subsidy from central government, but the reimbursement rules were largely frozen many years ago. In many cases the subsidy only covers part of the cost of accommodation. When councils are forced to place households in more expensive private accommodation, the gap between the subsidy and the actual cost must be covered from the local authority’s own budget.

This creates a structural funding problem. The more councils rely on temporary accommodation, the larger the unfunded portion of the cost becomes. In areas where housing shortages are severe, local authorities often have little choice but to continue using expensive placements simply to meet their legal obligations.

Over time, this dynamic has pushed temporary accommodation spending from millions into billions.

Manchester was not the anomaly

When David highlighted Manchester’s 478% increase in temporary accommodation spending, it appeared to be an unusually sharp example of local housing pressure. However, looking at the national figures today, it is clear that Manchester was not unique. Many councils across England have experienced similar patterns of rising demand, limited housing supply and escalating costs associated with short-term placements. The difference is that what once appeared to be a localised issue has now become systemic.

Temporary accommodation is no longer simply a safety net for a relatively small number of households. It has grown into a large and extremely expensive component of the housing system.

Lessons for housing policy

The purpose of revisiting David Knox’s work is not to suggest that temporary accommodation should not exist. Every housing system requires emergency provision for households facing sudden crises. However, the scale of the current system raises important questions about how housing policy has evolved over the past decade.

If temporary accommodation costs have tripled since 2016, it suggests that the underlying housing shortages that drive homelessness have not been resolved. It also highlights how expensive it can be when the housing system relies heavily on short-term solutions rather than long-term supply.

David Knox’s original article focused on a single city and a striking set of figures. In hindsight, it also captured a trajectory that would later become visible across the country.

There is also a broader question worth asking. If the cost of temporary accommodation has risen from around £1 billion to almost £3 billion a year in less than a decade, what will the figure look like five years from now if the underlying housing shortages remain unresolved? Local authorities are already warning that the current trajectory is financially unsustainable. Whether policymakers are willing to address the structural causes behind the numbers remains to be seen.

Manchester was not the crisis, it was the warning.