Temporary Accommodation Finance: What the HCLG Report Means for Your MTFP

Temporary Accommodation: When Does an Emergency Become the New Normal?

April 24, 2026

A new report from the Housing, Communities and Local Government (HCLG) Committee, published this week, paints a stark picture of where temporary accommodation in England now stands. Nearly 176,000 children are living in temporary housing. Nightly paid accommodation for families has doubled since 2022. Category 1 hazards are described as "commonplace." And subsidy rates remain frozen at 90% of Local Housing Allowance levels from 2011.

For housing finance professionals, none of this will come as a surprise. But the report is a useful moment to step back and consider what it means for local authority finances — not just now, but over the medium term.

The Financial Trap Councils Are In

The committee's report describes a "vicious circle" — and that framing is exactly right from a finance perspective.

Councils are caught between rising demand, a frozen subsidy rate, and a private market in which landlords are actively switching families from longer-term leases to nightly paid accommodation because the returns are higher. The result is that the cost per placement rises, supply becomes more volatile, and the council has no leverage to improve standards without risking losing the accommodation altogether.

Commissioning higher-quality accommodation — which is what the government, the committee and common decency all demand — pushes councils further into deficit on each placement, because subsidy rates do not come close to covering market rents for decent stock. This isn't a housing management problem. It's a structural balance sheet problem, and it needs to be treated as one.

What This Means for Your MTFP

For Section 151 Officers and housing finance leads, the critical question is whether your Medium Term Financial Plan reflects the true trajectory of temporary accommodation costs — not just current spend, but the risk of further escalation.

A few specific pressure points worth stress-testing:

Nightly paid accommodation volatility. If your authority is reliant on nightly paid placements, you are exposed to rapid cost increases with very little notice. A landlord can terminate a lease and move to nightly rates quickly. Your MTFP should model a scenario in which a material proportion of your current leased supply disappears within 12 months.

Out-of-area placement costs. The committee warns that as B&B usage is driven down, some councils may increase out-of-area placements or shift to other shared accommodation. Both carry financial risk — out-of-area placements typically cost more, and the reputational and legal risks of unsuitable accommodation are significant.

The Decent Homes Standard. The government plans to apply the revised standard to temporary accommodation from 2035. Nine years sounds distant, but capital planning cycles are long. If your authority owns or leases stock that will need to meet this standard, the investment requirement should be appearing in your HRA or General Fund capital programme now.

The Local Authority Housing Fund. The £950m available over the next four years is a meaningful opportunity, but it requires upfront capital commitment and long-term revenue modelling. Acquisitions funded through LAHF need to be properly appraised — the revenue savings from replacing nightly paid placements with owned stock can be compelling, but only if the deal is structured correctly.

The Strategic Case for Moving Upstream

The most financially resilient authorities we work with are those that have moved from reactive placement management to a proactive supply strategy. That means:

Acquiring stock directly, using LAHF funding, Right to Buy receipts, or other capital resources, to replace volatile nightly paid placements with owned or long-leased supply
Modelling the break-even point at which ownership becomes cheaper than continued nightly paid accommodation — in most markets, this crossover happens sooner than finance teams expect
Using institutional funding structures where appropriate — long-dated, inflation-linked arrangements that match the tenure of the need and remove exposure to short-term market movements

The Westminster City Council case, in which a 42-year institutional funding solution enabled the acquisition of 368 homes previously leased for temporary accommodation, is an example of what is possible when temporary accommodation is treated as a balance sheet question rather than a housing management one.

The Bottom Line

The HCLG Committee is right that the only long-term solution is more permanent homes. But councils cannot wait for national housing supply to solve a crisis that is burning through their General Fund budgets today.

The authorities that will be in the strongest financial position in five years are those that start treating temporary accommodation as a strategic finance issue now — modelling the risks, stress-testing the MTFP, and exploring supply-side interventions that reduce rather than compound long-term cost exposure.

If you are reviewing your temporary accommodation position within your MTFP and would like an independent perspective, we would welcome a conversation.

This post was written in response to the HCLG Committee report published on 22 April 2026, and commentary by Jules Birch in Inside Housing. All views are those of Haverly Consulting.

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Section 151 Officers: Is Your Temporary Accommodation Strategy Financially Sustainable?

By Nick Haverly • February 27, 2026

Temporary accommodation is no longer just a housing issue. For many councils, it’s now one of the most significant structural pressures in the Medium-Term Financial Plan. Escalating nightly accommodation costs. Lease expiry risk. Revenue volatility without asset ownership. The question is simple: Are you managing a housing pressure — or carrying unmanaged balance sheet risk? I recently led a 42-year institutional funding solution for Westminster City Council that enabled the authority to: Acquire 368 homes previously leased for TA Replace volatile nightly costs with structured, index-linked payments Embed £33.5m of retrofit funding Secure long-term control of supply Retain unencumbered asset ownership at lease expiry This wasn’t just a property deal. It was a balance sheet intervention. Institutional investors are actively seeking long-dated, inflation-linked public sector exposure. Councils with strong credit profiles can access that capital — if transactions are structured correctly. For authorities heavily exposed to TA volatility, maintaining the status quo may be the highest-risk option. If you’re reviewing TA pressures within your MTFP, I’d welcome a conversation.

Types of Local Authority Company

By Nick Haverly • September 15, 2020

There are a many different types of company that exist, but not all of them are appropriate for all types of activity. The main corporate structures available to Councils are: Company Limited by Shares Company Limited by Guarantee Community Interest Company Community Benefit Society Limited Liability Partnership (LLP) The following paragraphs briefly describe each in more detail. Company Limited by Shares This is the usual legal form for profit-making private companies and is where shareholders buy shares that allow them to earn dividends from the company’s post tax profits. Most Council owned companies are set up as this type of company, with the Council being the main sole shareholder. They invest all of the equity in the company and therefore receive all the dividends once the company is profitable. The basic purpose and benefit of a limited company is that it creates a separate legal entity which limits the liability of the Council (or any other shareholder) if the company ever becomes insolvent. Company Limited by Guarantee This form of company has no shareholders so there is no distribution of dividends. Instead the company has Members who each guarantee to pay up to £1 towards the company’s debts. All surpluses are then re-invested in the company or the community. This is the most common form of company for not-for-profit social enterprises. It is therefore unlikely to be suitable for a private rented housing company, unless there is no intention to earn a return on the investment. Community Interest Company (CIC) A Community Interest Company is based on a conventional company model, either limited by shares or by guarantee, with two additional features designed to ensure that its activities are undertaken for the benefit of the community. Firstly, a CIC must submit to the Regulator on its formation a community interest statement that sets out the company’s benefit to the community. Secondly, the memorandum/articles of association must state that ‘the company shall not transfer any of its assets other than for full consideration’, except in cases where the assets are transferred to another asset-locked body such as another CIC or a charity, or the transfer is made ‘for the benefit of the community other than by way of a transfer of assets to an asset-locked body’. However, the regulations do make provision for the payment of capped dividends in the case of a CIC limited by shares. As a result, once again, if the intention is to provide uncapped dividends to the Council, or potentially dispose of any of the properties in the future to a non-charitable entity, then this structure might not be appropriate. Community Benefit Society This corporate form, which replaced Industrial and Provident Societies, has members rather than shareholders, and as a result there is no share capital and no distribution of dividends. These organisations are registered with the Financial Conduct Authority rather than Companies House. They can be charitable, which offers tax advantages, but are not required to be registered with the Charities Commission. As a result, this form of corporate structure would also not be appropriate for our purposes. Limited Liability Partnership (LLP) Where two or more parties are working together to achieve a common objective, with the aim of combining their resources and expertise, there can be tax advantages to forming a LLP rather than creating a company limited by shares that is taxed as a separate entity. For example, a Council could input land assets, whilst a private partner inputs equity capital and development expertise and staffing resources, to undertake a joint development producing homes for sale or long-term rent. Typically, the partnership would share profits from the joint venture proportionate to the value of their investment in the arrangement. Each partner is then taxed separately in relation to their investment in the LLP, rather than the company paying taxes on the profits in its own right. This is known as being tax transparent and would result in the Local Authority receiving its share of the LLP profits tax free, as it is exempt from corporation tax, although the return to the Council would still probably be less than it would be if it was the sole shareholder in a company limited by shares. The LLP structure can also make it easier to make changes to the partnership as it progresses, as opposed to issuing or selling shares in a limited company., although LLPs are still registered at Companies House and regulated like a separate company. Summary As you can see there are a number of structures that are available to Local Authorities. It is therefore essential that you seek legal advice to help you evaluate and recommend the most appropriate company type based on the strategic purpose you have chosen to pursue and the specific business activities, tenures, and delivery arrangements you intend to adopt. There is not necessarily just one suitable legal form in each case, and there will be pros and cons of each company option available to you.

What is a Local Authority Housing Company and why set one up?

By Nick Haverly • July 23, 2020

For a Local Authority, setting up a commercial entity is a totally alien business and therefore it comes as no surprise that many local authorities lack the knowledge required to set up and operate their companies in the most successful, financially beneficial and tax efficient manner.

Can Right to Buy Receipts be used to buy S106 Properties?

By Nick Haverly • May 25, 2020

This week a former client asked me for advice regarding the Council using Right to Buy receipts to purchase developer-led S106 homes, following the Registered Provider pulling out of the proposed purchase from the developer. This isn't the first time that this topic has been raised so I thought I would respond more broadly, with my view. The Right to Buy scheme was introduced in 1980, to help council tenants in England buy their home at a discount. The scheme was reinvigorated from April 2012, with maximum discounts being increased from as little as £16,000 in some areas to a maximum that now stands at £82,800 across England and £110,500 in London. Since then there has been a surge in the number of homes sold under the RTB scheme - with 79,119 homes sold between 2012/13 and 2018/19. The intention of the policy, as well as to encourage home ownership, was to increase the receipts available to Local Authorities and encourage them to use those increased retained elements of the Capital receipt to invest in replacement affordable housing. There are rules about what qualifies as eligible spending and how Right to Buy Receipts can be used. Put simply, there are three ways of delivering the replacement housing: The Council builds new affordable homes, The Council acquires homes that are not already let as social or affordable housing, or The Council grants to Housing Associations or Registered Providers to deliver these new homes within the same guidelines. The wording in the original DCLG (as it was then) agreement is not overly specific on the subject of developer-led S106 sites, however given that the Local Authority is able to use such funds to provide its own 100% affordable developments and indeed it can be used to deliver the affordable element of any mixed tenure development that it wishes to undertake itself, I do not see how purchasing such S106 properties using retained Right to Buy receipts would be against the policy, providing the development has not benefited from other central government housing support. This opinion has also been tested and proven in a number of Local Authority areas over the past few years. In 2015, Epping Forest District Council entered into an agreement with Linden Homes to purchase S106 affordable properties at Barnfield in Croydon, using Right to Buy receipts and other HRA capital resources. In 2018, Brighton and Hove City Council stepped in to purchase a number of affordable homes from Developers as none of the City's five housing associations wanted to take them on. This can sometimes be due to the number of homes not being sufficient to see the RP's minimum, but also, more often of late, is that RPs are acting more commercially and being far more selective as to what properties they take on. In 2019, Cambridge City Council agreed to purchase fourteen S106 affordable homes from Hill, on its development on Clerk Maxwell Road and former Trinity College Tennis Courts In addition, London Borough of Tower Hamlets also has the purchase of Developer-led S106 affordable housing as a key option within their Strategy for using Right to Buy receipts.