"We believe there is an opportunity for landlords to work with specialist housing providers to increase the supply of housing while maximising the potential of their assets."
- John Angus - Switch Management Ltd
Labour’s promise to build 1.5m homes in the next five years underscores the scale of the challenge, requiring annual house-building rates that haven’t been seen since the 1970s. For some local authorities, this will mean a 400% increase in the delivery of new homes.
Here, John Angus, Managing Director at Switch Management Ltd explores the economic impact of the affordable housing shortage and how landlords could offer a solution.
As they grapple with the rising cost of living, many vulnerable families across the UK have become reliant on local authorities placing them in temporary accommodation. Recent research by the Centre of Homelessness has revealed the stark financial burden this has presented, with net local authority expenditure on TA more than doubling from £478m in 2018-19, to £1,058m in 2023-34 – an 80% increase in real terms.
While the Autumn Budget saw £500m committed to kickstart “the biggest increase to social and affordable housing in a generation”, councils still face immediate challenges in managing the current supply shortage.
For private landlords, working in partnership with local authorities to help address this issue can be mutually beneficial. While providing families in need with safe, stable and cost-effective accommodation, they can simultaneously create more reliable returns for their property investments.
Housing economics
With government spending under constant scrutiny, annual TA expenditure is likely being underreported. The Centre for Homelessness found that for local authorities, TA costs actually reached £2.42bn in 2023-24 – notably higher than the official £2.29bn figure reported.
Much of this spending is driven by reliance on budget hotel and B&B accommodation, in lieu of longer-term housing solutions. Without fixed-rate contracts, authorities are often faced with volatile pricing, with nightly room rates varying between £40 - £200. Beyond the significant financial impact, this model provides residents with limited facilities and frequent relocations, creating instability and a low standard of living for vulnerable families.
Private and public partnerships
There is growing recognition that collaboration between the public and private sectors could help to address these challenges. We believe there is an opportunity for landlords to work with specialist housing providers to increase the supply of housing while maximising the potential of their assets.
Residential programmes offer a number of benefits for landlords too. Two-year tenancy agreements with annual incentives mean guaranteed rental income and low tenant turnover rates; professional property managers minimise the administrative burden, with no letting or additional maintenance fees; and fully underwritten bills provide additional financial security.
For local authorities, the cost of temporary accommodation can be up to three times more than the local rental sector, so private partnerships can deliver significant cost savings for the public purse. But, more importantly, they provide vulnerable families with stable, good-quality housing – creating a solid foundation to thrive in their communities.
Our recent work on a project with a London borough demonstrates the potential scale of this impact. By moving 250 families from various budget hotels into longer-term accommodation with fixed rates and proper facilities, we are projected to have reduced annual costs by £ 2.5m, while significantly improving resident satisfaction.
Building for a better future
Temporary accommodation is not a permanent solution. While the ambition to build more affordable homes remains crucial for addressing the housing crisis in the long term, there is an immediate opportunity to improve outcomes for vulnerable families today.
By keeping a commitment to quality at the heart of delivery, these collaborations can create a lasting positive change. Together, we can support those in need, generate reliable returns for property owners, and provide a better service for local communities.
