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Hackney Council has joined forces with other London boroughs to establish a rent cap for nightly temporary accommodation, an increasingly common option for homeless households entitled to local authority assistance.
The move, agreed by members of the group London Councils, which represents all 32 boroughs and the City, aims to tackle spiralling costs and a scarcity crisis that has seen boroughs in bidding wars over properties.
Under the trial scheme, launched in January, councils will negotiate a cost threshold for nightly accommodation let via the private rented sector (PRS), and agree not to pay above it. The agreed cap has not been revealed.
London Councils said that while difficult to assess, an indicative rate for a two bed property let on a nightly basis in inner east London would be between £40 and £50 per night.
Temporary accommodation is provided for households that have been identified as homeless and have the right to be housed by the local authority. These households are then able to apply for permanent housing.
Since 2012, Hackney’s expenditure for nightly rented accommodation — a more lucrative option for landlords than longer-term lets — has risen by 155%. Funding cuts have further strained the council’s budget.
Between September 2013 and September 2014, the number of Hackney households in temporary accommodation rose 10.5%. As of December 2014, 1,971 households were in temporary accommodation, 450 more than in December 2012.
Government figures show that the capital as a whole experienced an 8% rise in the same period, reporting 45,810 families living in temporary accomodation as of September 2014.
London Councils have reported that in recent years, boroughs have found it increasingly difficult to source suitable affordable properties in the PRS.
The rent cap is being treated as a medium-term solution to a long-term problem.
In addition to rising rent costs, a London Councils document outlining the scheme reports “evidence that some landlords are no longer letting to out-of-work benefit claimants since the introduction of changes to the welfare system.”
The report also concedes that negotiating reduced rents “will not achieve the important longer-term goal of increasing supply.”
To meet demand, purchasing individual buildings for nightly accommodation, such as Hackney’s recent purchase of a hostel on Lea Bridge Road, is one possible solution.
Councillor Philip Glanville, Cabinet Member for Housing said: “With the financial pressures all councils are experiencing it is vital that we find a long-term solution that will help bring consistency to rent levels charged by some landlords.
“It’s very early in the trial and Hackney, like other councils, will continue to work with landlords to provide temporary housing that is affordable.”
A London Councils spokesperson said: “Longer term lease agreements for a property, in months or years, offer significant savings to the tax payer plus sustainable rental income for landlords and most importantly a stable way of life for homeless households.”