Tower Hamlets Council has established a hardship fund to support tenants facing rent increases in temporary accommodation. The decision, made at the Mayor's Executive Decision Making meeting on 31 October 2025, aims to mitigate any adverse impact on households unable to claim full housing benefit, and will also cover any additional costs that may occur in a small number of Households in relation to the total benefit cap, bedroom tax and some legacy benefits.
The move comes as the council seeks to maximise Housing Benefit Subsidy income from its own properties used as temporary accommodation. The council considered the alternative options of doing nothing, which would prevent the Council from reducing its expenditure on Housing Benefit subsidy loss, or increasing rent levels without amending the Housing Benefit classification, which would only deliver a smaller reduction in the Council's overspend. A report included in the Public Reports Pack 31st-Oct-2025 Mayors Executive Decision Making detailed plans to update how these properties are classified for Housing Benefit purposes and align rents with current Local Housing Allowance (LHA) rates.
The council forecasts that these changes will generate an additional £7.1 million per year. According to the report, the majority of affected households (88%) will see any increased rent covered by a corresponding rise in their Housing Benefit award. However, for the remaining households, the newly created hardship fund will provide a safety net. £0.404k has been set aside in the current financial year for the hardship fund. The report states that this is a maximum forecast amount based on current affected households, and that the number of affected households will reduce each year as they move out of Temporary Accommodation, and the provision for this hardship fund will be reduced in tandem in future budget years and in line with the changing personal circumstances.
The report stated that the establishment of a hardship fund is to ensure that there are no additional in-year costs for the small number of existing households that will otherwise be negatively affected by these proposals to maximise Housing Benefit Subsidy income.
Support will be provided to all households that are not currently in receipt of Housing Benefit through proactive intervention. This targeted outreach campaign will include writing to all affected tenants and direct text messaging, offering personal advice sessions to discuss options to ensure that they are not negatively affected by the rent increase. The application process involves proactive intervention, including writing to all affected tenants and direct text messaging, offering personal advice sessions to discuss options to ensure that they are not negatively affected by the rent increase. Options include undertaking a review of their welfare rights assessment, considering moves to more affordable Temporary Accommodation where suitable, and offering money management advice.
The council currently provides temporary accommodation to approximately 3,250 households, with 587 housed in council-owned properties. The changes will affect both General Fund and Housing Revenue Account properties. The legal basis is based on external legal opinion that it is a reasonable step for the Council to reclassify those properties that it owns and uses for Temporary Accommodation so that Housing Benefit subsidy can be claimed for 100% of the actual rent charged. Legal Services stated that on the basis of the advice they have received, a reasonable argument can be made that the Council is able to charge rent at the market rate.
An Equality Impact Assessment Initial Screening Tool, included in the Public Reports Pack 31st-Oct-2025 Mayors Executive Decision Making, concluded that the impact of the proposed changes would be neutral, as any increase in rent will be offset by either a corresponding increase in Housing Benefit, or a payment of top-up grant, there will be no substantive impact on any household.
Officers will keep affected households under periodic review and bring back proposals for the 2026/27 financial year as part of the normal budget setting process.
The council has also delegated authority to the Corporate Director of Housing and Regeneration to align rents for council-owned properties used as Temporary Accommodation with any future increases in Local Housing Allowance.