Harrow Council is facing significant financial challenges as rising homelessness costs have led to a £5.9 million overspend in the Housing General Fund. The council anticipates that budget pressures in Housing Needs will continue to rise in 2025/26 due to rising demand and increasing unit prices for temporary accommodation.
To address these anticipated future costs, the council has increased the Temporary Accommodation Demand Fund by £3 million, bringing the total reserve to £7 million.
The overspend, primarily attributed to the increasing demand for temporary accommodation, was highlighted in the Revenue and Capital Monitoring 2024-25 Final Outturn Report presented at the Performance and Finance Scrutiny Sub-Committee meeting on Tuesday 29 July 2025.
The report stated that:
The ongoing pressure in homelessness is the result of an increase in demand and a lack of available temporary accommodation at affordable rates and hence a sustained reliance on expensive nightly paid accommodation.
The report also noted that an extremely elevated level of demand for housing services and emergency accommodation is a national issue that is particularly acute to London.
The Strategic Performance Report for Quarter Four of 2024-25, also discussed at the meeting, identified rising costs of temporary accommodation as a key challenge for the council.
According to the report, the Homelessness service has an overspend of £7.496m which is partially offset by additional income of (£936k) from the Property Acquisition Programme (PAP), a cost reduction in other housing services of (£121k) and grant funding of (£490k), resulting in a budget pressure of £5.949m.
The Property Acquisition Programme (PAP) aims to offset homelessness costs through the acquisition of properties for use as temporary accommodation. The Revenue and Capital Monitoring 2024-25 Final Outturn Report indicates that the acquisition of properties is ongoing, with purchases agreed, including twenty-five units from Bonners Field development, and conveyancing in progress with expected completion dates between May 2025 and July 2025.
The council must bridge the gap between the rent payable and the amount recoverable via housing benefit subsidy from the Department of Works and Pensions (DWP), which is still limited to 90% of the Local Housing Allowance (LHA) rates from 2011. As rents remain above the 2011 LHA rates, this is resulting in a Housing benefit subsidy loss on each placement and placing a pressure on the Housing Needs budget. In 2024-25, the Council incurred a total subsidy loss of approx. £10.119m compared to £7.4m in 2023/24.
London Councils have stated and warn that the worsening homelessness emergency represents the single biggest risk
to boroughs finance and is pushing town halls towards bankruptcy.
