London councils paid private landlords more than £14m last year in “incentives” to persuade them to house homeless people, in addition to rents and other fees.

The payouts were branded as “ludicrous” by housing campaigners and “intolerable” by councils. The payments of up to £8,300 each were made to landlords more than 5,700 times in 2018 to house people who were either homeless or at risk of homelessness. Barnet Council in north London, paid out the largest amount totalling £1.5m in order to secure housing. In the past five years, the borough has built only 20 council houses while across London just 680 new council homes were built during the last 12 months. Councils at Hillingdon, Haringey and Barking & Dagenham also spent more than £1m each. Councils claimed some landlords played different councils off against each other to increase payouts and that the system was vulnerable to abuse. Barking & Dagenham has sold 48,500 council homes under the Right to Buy and is spending more than £800,000 a year renting back sold-off properties. Ealing, which spent £770,000 on incentives, said it saved the council money by keeping people out of shabbier, but more expensive emergency and temporary accommodation.

Cash sweeteners

The payments were revealed in response to freedom of information requests. The fall in social housebuilding and a widening gap between housing benefit and market rents appear to be fuelling the payments. Polly Neate, the Chief Executive of Shelter, said: “It is ludicrous that 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 campaigning for a national programme to build 3.1m new affordable homes over the next 20 years. Landlords said the payments compensated them for accepting homeless tenants who are more likely to fall behind on their rent, especially if they received Universal Credit which makes payments in arrears.

David Smith, Policy Director at the Residential Landlords Association, said:

“Councils should be focusing more on supporting tenants . Bribing people isn’t the answer. You end up with people taking tenants who don’t really want them and then evicting them later.” Cllr Darren Rodwell, the housing lead at London Councils, said the level of payments was “a symptom of London’s broken housing market”.

“At a time when our funding from central government has been reduced by 63 per cent since 2010, we would much rather be investing in frontline services,” he said.

London councils are setting up a joint body, Capital Letters, to purchase housing using collective bargaining and to reduce competition between councils for the same homes.

By Patrick Mooney, Editor