Croydon Council has approved a new strategy aimed at tackling homelessness and boosting housing supply, projecting approximately £10 million in savings between 2027 and 2030.
The Cabinet met on Wednesday, 23 September 2026, to endorse a Temporary Accommodation Strategy and Action Plan for 2026-2030. This strategy aims to address significant financial pressures and resident wellbeing challenges stemming from high demand for homelessness support and a shortage of affordable housing. The plan prioritises preventing homelessness earlier, increasing housing supply, and transforming the temporary accommodation portfolio to improve financial sustainability.
Councillor Lynne Hale, Cabinet Member for Homes, stated that the strategy provides a comprehensive framework to address the causes and consequences of temporary accommodation demand, supporting improved resident outcomes and greater financial sustainability for the Council. The strategy builds on progress made since 2024, including the largest reduction in temporary accommodation numbers of any London borough in 2025, the end of family bed and breakfast accommodation, and a significant decrease in care leavers living in temporary accommodation.
Financial Pressures and Savings
The council is facing considerable financial pressures, exacerbated by unfunded national and local cost increases related to demand and market prices. A significant factor is the government's policy of capping housing rent level subsidies at 90% of 2011 Local Housing Allowance (LHA) rates, which costs Croydon approximately £45 million annually. Furthermore, the Housing Revenue Account (HRA) is forecasting an overspend of £3.9 million, and the Dedicated Schools Grant (DSG) faces a projected overspend of £45.0 million. The council's revenue budget is also critically impacted by a historic borrowing and subsequent debt burden.
Beyond the projected £10 million in savings between 2027 and 2030, the strategy aims to enhance the overall financial sustainability of the temporary accommodation portfolio. This is expected to reduce the council's wider financial pressures by decreasing reliance on expensive nightly paid accommodation and optimising the portfolio. However, the report acknowledges that temporary accommodation will continue to exert considerable pressure on council finances throughout the strategy's lifespan, reflecting sustained demand for homelessness support, ongoing reliance on temporary accommodation, and broader market pressures.
Transforming Temporary Accommodation
A key component of the strategy is the transformation of the temporary accommodation portfolio. This involves reducing reliance on high-cost nightly paid accommodation, strengthening procurement and contract management, and increasing council-controlled accommodation where financially viable. The council also plans to renegotiate historic provider rates. These measures are designed to reduce the number of households in temporary accommodation and achieve savings through demand reduction, portfolio optimisation, and financial sustainability initiatives.
Preventing Homelessness Earlier
The strategy prioritises preventing homelessness and reducing demand for temporary accommodation through several specific actions. These include strengthening prevention activity, improving move-on arrangements, and expanding housing options. The council will also focus on reducing reliance on expensive forms of temporary accommodation, developing a digital front door with self-service options, and supporting customer-led housing solutions. A homelessness prevention toolkit will be developed and implemented, alongside rapid response arrangements for low-risk enquiries. The strategy also aims to expand tenancy sustainment and landlord retention initiatives, strengthen private rented sector prevention activity, and implement dedicated move-on officer arrangements. Maximising the use of Discretionary Housing Payments and other preventative financial assistance is also a priority. Furthermore, a Grow Our Own
workforce programme will be developed to improve retention, reduce agency dependency, and enhance professional capability.
Successes and Future Impacts
Croydon achieved the largest reduction in temporary accommodation numbers of any London borough during 2025, driven by targeted management interventions and increased move-on activity. This success was attributed to actions such as ending the use of commercial hotels and bed and breakfast accommodation for families, ending split-family placements, moving over 300 households into social housing, recovering over 200 temporary homes through fraud and occupancy checks, and reducing the number of care leavers in temporary accommodation from approximately 700 to 100. While specific lessons learned are not detailed, the current strategy builds upon these achievements.
Subject to successful implementation, the strategy is forecast to contribute approximately £10 million in savings between 2027 and 2030. Individual projects will be assessed on a value-for-money basis before commencement. The strategy aims to improve outcomes for residents and strengthen financial sustainability, though the full impact on the quality and availability of temporary accommodation will depend on the successful execution of these plans.
Read the full details in the Public reports pack and the Decisions from the Cabinet meeting.