Croydon Council approves temporary accommodation rent changes expected to raise £1.4m

The council said 98% of the 337 affected households will see no financial impact because any increase will be covered by housing benefit. Of the remaining households, two chose to remain and will see a small increase of up to £2 a week, while six households that chose to move were supported to find suitable alternative accommodation.

The three blocks, on London Road, have long been used by Croydon as temporary accommodation for homeless households. In 2017, the council agreed a 40-year contract covering the sites, which together provide 338 units.

The blocks have previously been the subject of complaints from residents. In 2023, members of the Croydon Temporary Accommodation Campaign called for “immediate improvement” to what they described as “uninhabitable” temporary accommodation, before the council later accepted its engagement with families experiencing homelessness had “often been unsatisfactory”.

At the time, the council said the blocks provided “much-needed, self-contained, temporary accommodation” and that fire safety improvements had been made.

Around 3,600 households are in temporary accommodation in Croydon, with the council expected to overspend on its homelessness budget by £15m in 2025-26.

The decision comes amid mounting pressure on councils over the cost of temporary accommodation. English councils face a temporary accommodation shortfall of nearly £4bn by 2029-30, according to the Local Government Association (LGA).

The LGA said councils had spent almost £1.5bn more on temporary accommodation since 2017 than they had been reimbursed for through subsidy payments, with councils generally only able to claim back 90% of 2011 Local Housing Allowance rates.

Councils including Birmingham, Sheffield and Bristol have also sought ways to manage losses linked to the subsidy rules.

Birmingham launched a “10 year plus one day” lease scheme to reduce a £7m annual gap, while Sheffield recorded a £5.9m loss linked to subsidy rules in 2022-23 and Bristol warned its annual temporary accommodation subsidy loss could reach more than £17m without action.

Jason Perry, executive mayor of Croydon, said: “The demand for temporary accommodation continues to grow, and councils cannot simply ignore the financial pressures that come with it.

“We have a responsibility to take practical action that protects services for residents today and in the future. This decision creates a clearer and fairer approach to charges while helping us make better use of the funding available to support those in temporary accommodation.

“Where changes affect individual households, we have taken a careful and proportionate approach. Every affected household has been individually assessed and supported, with the vast majority seeing no financial impact and tailored support provided for those whose circumstances required it.

“This is how we protect services, manage public money responsibly and make sure support remains available for Croydon residents who need it most.”