New research commissioned by London Councils, the London Housing Directors’ Group and Society of London Treasurers, has laid bare the scale of London’s homelessness crisis, revealing that boroughs are now spending the equivalent of 11% of every household’s council tax bill on temporary accommodation alone.

Conducted by the London School of Economics, the report found that eight London boroughs spent a combined £543 million on temporary accommodation in 2024/25. However, the amount national government reimburses councils’ temporary accommodation spend has been frozen for 14 years.

Consequently, only a portion of the £543 million spent was offset by the government’s housing benefit subsidy and other dedicated funding streams – leaving a shortfall of £223 million, which had to be met from boroughs’ already stretched budgets.

London School of Economics estimate that if this pattern holds across all boroughs, the citywide annual shortfall will exceed £740 million. Further London Councils analysis has shown that boroughs are now spending £5.5 million a day on homelessness in 2024-25 – up from £4.2 million a day in 2023-24

London Councils’ Executive Member for Housing and Regeneration, Cllr Grace Williams, said:  “Boroughs are doing everything they can to support homeless families, but the system is buckling under the strain. The housing benefit system has failed to keep pace with reality – and councils are paying the price. We urgently need government to step in with emergency funding and long-term reform to prevent more families falling into homelessness and more councils facing financial collapse.”

Last week the government announced an £84 million funding injection nationally to help prevent homelessness and support children living in temporary accommodation, of which London is set to get £36 million.

Responding to the announcement, London Councils Chair Cllr Claire Holland, said: “Despite the work of boroughs, the Mayor of London and our voluntary sector partners to prevent homelessness and rough sleeping, London’s homelessness crisis has worsened significantly over recent years.  With 1 in 50 Londoners homeless and record numbers of children living in temporary accommodation, swift action is vital to prevent homelessness and rough sleeping.

"We’re therefore delighted that the government is investing in solutions that focus on prevention, innovation and collaboration - this funding will be critical for progressing the joint work we are doing with the Greater London Authority as we seek to turn the tide on this crisis."

To celebrate 60 years of the London boroughs, each week, London Councils is sharing prevention case studies highlighting how preventative action by London boroughs is helping to save money and improve the lives of their residents.

This week, our case study is from Southwark, where the borough’s SWIFT (Southwark Working Intensively With Families Together) programme is working to reduce the number of children on safeguarding plans, as well as reducing the number of cases escalating to legal proceedings, while ensuring that there is a substantial evidence base where legal proceedings are determined the best course of action.

You can read Southwark's case study in full on our LinkedIn page and all of our prevention case studies here.