Funding gap equivalent to more than 1,000 new social homes
The ongoing freeze to temporary accommodation subsidy rates is now costing district councils £268m a year, according to a membership body.
The District Councils’ Network (DCN), which represents 169 local authorities, says this is enough to fund 1,100 “social homes” on council land annually.
When councils place households into temporary accommodation they can reclaim a portion of the cost from central government. However the amount of subsidy is capped in line with 90% of the 2011 Local Housing Allowance rate.
Due to rental costs rising, the amount of subsidy from central government now only covers 34% of district councils costs, as opposed to 90% in 2011.
DCN, citing Housing Forum analysis showing it costs £243,700 to build a house on council land, said the £268m funding shortfall is equivalent to 1,101 new social homes a year.
DCN wants the government to uplift the temporary accommodation subsidy rates in line with 90% of current Local Housing Allowance rates. It is also calling for capital investment to help councils build and acquire their own temporary accommodation and long-term sustainable funding to “shift from expensive emergency accommodation to permanent housing solutions.”
>>See also: The strain of temporary accommodation: are local authorities’ innovative solutions enough?
Richard Wright, chair of DCN, said: “The use of grossly insufficient 2011 rates to refund temporary accommodation costs both threatens councils’ financial sustainability and undermines our housebuilding ambitions.
“The government has set bold targets to build 1.5 million homes, including a revolution in social housing, yet councils are losing the equivalent of over a thousand homes worth of funding every year because our temporary accommodation funding is nearly 15 years out of date.
“The solution is to update the funding to reflect current rental costs, so councils stop losing money and can free up resources to invest in permanent housing solutions.”
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