Last year English councils spent a record £1.74bn on hotels, B&Bs and hostels – 9% of their annual budgets. Demand for temporary accommodation is being driven by the Government’s acceleration of the asylum decision process, along with rising homelessness linked to a shortage of social homes and the cost of living crisis. Challenging environmental conditions such as floods are also contributing. 

 

But it’s not just local authorities that are affected. Pressure on housing associations around mould and damp, fire safety, RAAC and net zero means that registered providers regularly need interim homes for tenants when they deliver major works, or if they experience a building safety emergency. 

 

Over recent years, this headache of finding and funding temporary accommodation has largely been hidden. The urgency that is often involved means that staff focus on sourcing suitable homes fast, but who pays, how they pay, the cost and quality of accommodation isn’t always considered up front.  

 

Unpredictability also hampers planned procurement and cost control. Levels of need are tricky to forecast, and prices equally volatile, with algorithms pushing up supplier costs in response to a range of changing factors.  

 

As a result, temporary accommodation has become an opaque, non-compliant area of spend for many social landlords. 

 

Yet demand shows no signs of letting up. In London alone there’s been a 70% increase in the number of families in B&Bs and hostels over the past decade, and in Scotland, councils’ spend on temporary accommodation has risen by 50% in just three years. 

 

So, how can housing associations and local authorities develop a more strategic approach to the procurement of temporary accommodation? Here are six ideas. 

  

1. Consider the service type you need: Start by thinking about the approach that is right for your organisation. Each social housing provider will have different priorities and levels of demand. Some will want a light touch, automated response, where alternative housing can be booked simply and quickly. Others may require a more hands-on, personalised service that includes customised communication with tenants to ensure individual needs are met and expectations managed. 

2. Identify indicative costs: Temporary accommodation is a complex area to price, with live nightly rates influenced by algorithms. If a storm hits or a big sporting event is scheduled, availability narrows and prices rise.  

 

The range of provisions from different suppliers also makes comparisons complicated. Some companies offer hotel rooms, others provide guest accommodation, self-catering lets, short term serviced apartments, longer term assured shorthold tenancies (AST) – the list goes on. 

 

There are a variety of booking services including extensions, cancellations and refunds, and alternate options if a property isn’t suitable for someone’s needs. 

 

On top of this, different suppliers offer different add-ons like transport, furniture, removals, food vouchers and welcome packs. 

 

This variability makes it difficult for housing providers to contrast suppliers and make informed procurement decisions. One solution – and something we’ve done at PfH – is to build a matrix that compares the services and rates offered by each supplier and presents indicative overall costs for each.  

  

3. Do your due diligence: It’s vital to dig deep when vetting suppliers. Examine their licences, safety standards, capacity and availability. Find out how they scrutinise and manage their own supply chain and clarify their processes for inspecting, maintaining and servicing accommodation. Check customer service criteria and procedures for tenant liaison. Relocation can be a stressful time for tenants, particularly in emergencies, and you want a supplier that demonstrates the appropriate level of understanding and compassion. 

4. Keep your supply pool to a minimum: This is particularly relevant if your housing organisation requires temporary accommodation in rural or remote areas. Supply in these communities can be limited and if you procure from multiple suppliers in the same location then demand will inflate and rates will go the same way. By keeping the supplier pool tight, you have more leverage in negotiations. 

5. Be proactive: The need for interim housing is often linked to lengthy improvements or repairs. Work closely with your asset management team to predict demand early. As soon as you know rough timescales and locations for remediation or planned maintenance, share this information with your supplier and they can go out to the market and negotiate rates. This type of proactive communication with your supply base will help keep costs down. 

 

Regular communication with asset management colleagues is also essential during the delivery of building works. Recent research involving 137 stock owning councils shows that of the 700 residents moved from their properties due to repairs, over 70% were still in temporary accommodation six weeks later.  

 

This is generally down to repairs or improvements over-running and extensions on temporary accommodation can be costly if arranged last minute. Keep in touch on asset management delays and ensure you have a supplier in place that can be flexible. 

 

6. Control costs: As you procure from your chosen supplier, consider other ways to contain costs. Creating an accurate residents list and keeping it updated is key, particularly in an emergency. A fully validated record of tenants living in a block means you only relocate people you have a duty to relocate.  

 

Managing spend through checks on length of stay is also important. In an emergency, hotels are often the first option, but they are expensive, especially if subsistence is included. Long-term, hotel rooms aren’t the best option for tenants’ wellbeing either. Keep a close eye on the length of time that tenants are living in certain types of accommodation and find a supplier that does the same. Some suppliers aim to limit hotel stays to 5 – 7 days and after that, move people to self-serviced apartments that are more like home and are also lower cost. Make sure your supplier has a policy for relocations that go beyond 90 days, such as assured shorthold tenancies. 

 

Although demand is high for temporary accommodation, remember that this is a relatively new area for social housing procurement teams, and it will throw up challenges. Close communication and collaboration with your supply base will prove central to overcoming these issues and, most importantly, to finding safe, high quality, interim accommodation for tenants when it is most needed. 

 

By Stephanie Johnston, Support Services Category Manager at Procurement for Housing (PfH). Find out more about PfH’s Accommodation and Decant framework here.  

 

This article/ a version of this article was first published in Housing Digital in May 2024.