The Hidden Crisis: How Private Landlords and Hotels Are Cashing In on England’s Homelessness Emergency

Councils are spending billions on temporary housing, but behind the scenes, some private landlords and hotel owners are profiting at the expense of vulnerable families. What does this mean for property professionals, policymakers, and ethical investors?

England’s homelessness crisis is deepening and behind the growing number of families stuck in temporary accommodation, an uncomfortable truth is emerging. Private landlords and hotel operators are cashing in, charging local councils inflated rates for often substandard housing.

New investigations have revealed that some landlords are earning up to 60% above market rates, with little oversight on the quality or safety of the accommodation provided. Councils, desperate to house vulnerable people, are paying billions each year. Meanwhile, at least 74 children living in temporary housing have died in the past five years.

The situation is complex, emotionally charged, and politically sensitive. But for anyone involved in the property industry, it also highlights important questions about responsibility, opportunity, and the future direction of housing policy.

In this article, we dig deeper into the facts, explore the drivers behind this hidden economy, and offer insights for property professionals who want to understand the risks and responsibilities associated with this side of the market.

The Scale of England’s Temporary Accommodation Crisis

According to government data, over 100,000 households in England are currently living in temporary accommodation. This figure includes families with children, single adults, and vulnerable groups such as care leavers and those fleeing domestic violence.

In financial terms, councils spent more than £2.1 billion on temporary housing in the last financial year alone. This represents a 78% increase over the past five years.

Some of the spending has gone towards reputable providers who deliver good-quality accommodation and supportive environments. But in many cases, councils are being forced to place families in privately owned properties or budget hotels, where costs are high and standards are variable.

The result is a fragmented and often unregulated ecosystem where landlords can name their price, knowing that councils have limited alternatives.

How Private Operators Are Profiting

The profitability for some private landlords and hotel owners is stark.

• Some providers are charging councils nightly rates that equate to double or triple standard market rents.
• In many cases, properties are in poor condition, with issues such as damp, overcrowding, unsafe wiring, and inadequate sanitation.
• Inspections and oversight are minimal, due in part to resource constraints within council housing teams.

Investigative reports have shown that certain landlords are operating portfolios of multiple temporary housing units, receiving millions of pounds in council payments annually. Some hotels, originally struggling with occupancy after the pandemic, have shifted their business models entirely towards housing vulnerable families at premium rates.

For ethical landlords, these revelations are concerning. They paint the industry in a negative light and risk increased regulation that could affect all property owners, regardless of practices or intentions.

Why Councils Are Trapped

Councils are not willingly paying excessive rates. They are caught in a systemic trap.

Several factors are at play:

• Lack of affordable housing stock: Years of underinvestment in social housing have left councils with few properties of their own to allocate.
• Rising homelessness: A combination of eviction notices, domestic abuse cases, and asylum pressures have dramatically increased demand for emergency accommodation.
• Legal obligations: Councils have a statutory duty to house certain vulnerable groups, regardless of available supply.
• Funding pressures: Central government funding for temporary accommodation has not kept pace with actual costs, forcing councils to make difficult choices.

In short, councils often have little choice but to pay whatever private providers demand in order to meet their legal obligations.

The Human Cost

Behind the financial headlines is a devastating human story.

• Children growing up in single-room hotel accommodations with no access to play areas or kitchens.
• Families moved repeatedly, sometimes dozens of times in a year, disrupting education, employment, and health care.
• Reports of unsafe living conditions leading to physical injury, mental health deterioration, and even deaths.

Temporary accommodation is intended to be just that temporary. Yet many families are trapped for months, even years, in unsuitable housing.

This not only affects the immediate wellbeing of vulnerable people, but also contributes to long-term social costs in health, education, and public safety.

Implications for the Property Industry

For developers, investors, and landlords operating in or around the affordable housing space, this situation raises important considerations.

1. Ethical Investment Is More Important Than Ever

Investors seeking exposure to affordable or social housing sectors must ensure that their partners and operators maintain high standards.

There is growing scrutiny from media, regulators, and advocacy groups. Those who fail to deliver decent, safe, and value-for-money housing risk reputational damage that can affect brand equity and investment returns.

Ethical frameworks, social impact assessments, and transparent reporting are no longer optional. They are fast becoming standard practice for credible operators.

2. Regulation Is Likely to Tighten

The exposure of exploitation in the temporary accommodation sector is increasing pressure on the government to intervene.

Potential regulatory responses could include:

• Mandatory licensing schemes for all providers of temporary housing
• Minimum quality standards and inspection regimes
• Caps on nightly rates councils can be charged
• Increased penalties for non-compliance

Property professionals should monitor legislative developments closely and prepare to adapt operating models where necessary.

3. Opportunities Exist for Responsible Providers

The crisis also highlights a clear market opportunity.

Councils urgently need access to good-quality, reasonably priced accommodation solutions. Developers who can build or repurpose stock for this purpose, and landlords willing to commit to longer-term partnerships at fair rates, stand to build sustainable and profitable businesses.

Models such as modular housing, rapid-delivery schemes, and public-private partnerships are gaining traction as councils look for alternatives to costly nightly bookings.

What Needs to Change?

Fixing the current system will not be easy, but several broad actions are needed.

• Increase social housing stock: Central government must invest significantly in building new social and affordable homes, reducing long-term reliance on the private sector for emergency housing.
• Support ethical providers: Councils need frameworks to identify, reward, and scale partnerships with landlords and developers who offer good quality at fair prices.
• Strengthen oversight: National minimum standards for temporary accommodation should be enforced consistently, with proper funding for local authorities to inspect and enforce.
• Address root causes: Wider social policies on poverty, family support, and mental health must work in tandem with housing strategies to reduce the number of people entering homelessness.

Final Thought

The revelations about private landlords and hotels profiting from England’s homelessness crisis are uncomfortable but important.

They shine a light on systemic failures that have allowed the most vulnerable to be treated as commodities rather than citizens. They also present a moment of reflection for the wider property industry.

Ethical, responsible property professionals have an essential role to play. By engaging with councils, investing in quality, and putting social value alongside financial returns, the industry can help build a future where housing meets needs, not just profits.

The road to that future requires commitment, transparency, and collaboration. For those willing to lead, the opportunity to create real impact and long-term success is clear.