Cash-strapped London councils are shelling out more than £14m a year to private landlords in “incentives” designed to house the homeless, it has been revealed.
Last year private landlords were paid sweeteners of up to £8,300 each more than 5,700 times in a bid to encourage them to house people who were either homeless or at risk of being homeless, according to an investigation by The Guardian.
Landlords say the compensations are meant to counteract the fact that tenants of this kind are more likely to fall behind on rent. But some landlords also criticised the system, admitting it could be a “waste of money” given that such tenants are more likely to be evicted later on.
The system has been widely criticised. “The payouts are made in addition to rent and have been branded as ludicrous by housing campaigners and intolerable by councils,” says the newspaper.
The justification for such payouts is given as the drop in social housing being built as well as a widening gap between housing benefit and market rents.
Ealing, Hillingdon, Haringey and Barking and Dagenham all paid out more than £1m each last year. Barking, Dagenham and Ealing argue that this costs less money in the long-run than funding the building of social housing.
But Polly Neate, chief executive of the Shelter housing charity, says: “It is ludicrous councils have to resort to handing out cash sweeteners to secure housing for desperate families when there’s a much more sustainable solution: build social housing on an ambitious scale.”
Shelter is currently calling for £3.1m to be spent on a national social housing programme.
While the majority of London’s boroughs paid landlords these incentives to some extent last year, only five completed social housing builds.
The system operates nationwide but research from the homelessness charity Crisis shows that 25% of the UK’s homeless population are in London. Since 2010, homelessness in England has risen by 169%. Funding from central government has dropped by 63%.
In response to this issue, London councils are collaborating to secure housing within London. The not-for-profit Capital Letters will procure housing on behalf of the boroughs with £37.8m in funding from the Ministry of Housing over the course of three years. The system sets out to eliminate competition for housing between boroughs.