A recent report to Lewisham Council’s housing committee stated that 156 private sector housing used for temporary accommodation have been withdrawn from use.  The report said  “Both the economic downturn in the last few years and the changing housing market are resulting in an increasing percentage of private landlords choosing to increase their rent in line with market prices or choosing to no longer rent out their properties resulting in them disposing of the properties altogether.”

The challenges faced by Lewisham Council illustrate the growing strain on local authorities to provide adequate temporary housing in a changing and volatile rental market. Here’s an analysis of the key issues:

Key Trends and Challenges

  1. Loss of Private Sector Housing:
    • A decline from 854 to 698 private sector homes used for temporary accommodation between November 2023 and November 2024.
    • Primary Causes: Landlords reclaiming properties due to market exits, increased rent demands, or property sales.
    • Wider Trend: Reflects a shift as landlords sell properties to owner-occupiers or leave the rental market entirely.
  2. Increased Reliance on Expensive Nightly Paid Accommodation:
    • The number of households in nightly paid accommodation rose dramatically to 1,481, compared to 745 in April 2021.
    • Budget Impact: This trend is a major factor in the council’s forecasted ÂŁ12.9 million overspend on temporary housing.
  3. Challenges in Procuring New Housing:
    • Despite a goal to secure 200 leased units by March 2025, only 49 properties have been delivered so far.
    • Procurement Struggles: Reflect the difficulty of sourcing affordable rental properties in the current market.

Factors Exacerbating the Issue

  1. Economic Pressures on Landlords:
    • Landlords are increasingly aligning rents with rising market prices or exiting the market entirely due to:
      • Economic uncertainty.
      • Regulatory changes, such as energy efficiency standards.
      • Potential risks associated with new tenancy laws.
  2. Impact of the Renters’ Rights Bill:
    • The bill, which seeks to enhance tenant protections, may unintentionally cause short-term rental market volatility.
    • Landlords could become more selective about tenants or opt to leave the market, reducing housing supply.
  3. Benefit Cap and Affordability Constraints:
    • The benefit cap limits the maximum assistance households can receive, making it harder for families to transition from temporary accommodation to private rentals.

Council Responses

  1. Preventative Measures:
    • Efforts to prevent homelessness and support households in moving into private rented sector (PRS) housing.
  2. Procurement Strategy:
    • Aims to lease more units, though progress has been slower than anticipated.
  3. Broader Advocacy:
    • The council points to structural issues in the London housing market, where reduced private rental supply and rising rents are systemic challenges.

Policy and Market Implications

  1. For Local Authorities:
    • Greater financial support from central government may be required to manage rising costs of temporary accommodation.
    • Collaborative policies to incentivise landlords to remain in the rental market, such as tax breaks or grants for energy efficiency upgrades, could help.
  2. For Tenants:
    • Strengthening protections under the Renters’ Rights Bill must be balanced with measures to maintain and increase rental housing supply.
  3. For Landlords:
    • Policy stability and financial incentives could encourage landlords to retain properties for rent, mitigating the exodus from the market.

Conclusion

Lewisham Council’s situation is a microcosm of broader challenges in the London and UK rental markets. Addressing these issues requires a multi-faceted approach, balancing tenant protections with landlord incentives and ensuring sufficient funding for local authority housing initiatives.