Hackney Council is exploring the establishment of a housing company as a potential avenue to subsidise rents and mitigate housing benefit subsidy losses, with projected savings of £11.6 million over three years for the Housing Revenue Account (HRA) and £5.4 million for the General Fund.
The proposal emerged during a Housing and Homelessness Scrutiny Commission meeting where councillors received an update on the Homelessness and Temporary Accommodation Supply Transformation Programme. The income workstream of the programme specifically focuses on maximising income from central government by reducing housing benefit subsidy loss.
A significant challenge identified is the subsidy loss, where the council can only claim back 90% of the Local Housing Allowance (LHA) rates set in 2011, which are considerably lower than current housing benefit payments. The strategy includes aligning temporary accommodation rents with current LHA rates and exploring the transfer of temporary accommodation management to the council's housing company to legally bypass subsidy loss limitations. This move is intended to legally bypass subsidy loss limitations
and increase the income that we get from central government.
The operational model will involve establishing a framework between the council and the housing company and implementing operational process changes. This is expected to help reduce that subsidy loss, which in turn means that we've got more money to spend on preventing homelessness in the first place.
For the HRA, the savings are forecast as follows: £4.3 million in 2025/26, £3.5 million in 2026/27, £1.9 million in 2027/28, and £1.9 million in 2028/29, totaling £11.6 million. For the General Fund, the savings are £0.4 million in 2025/26, £2 million in 2026/27, £2 million in 2027/28, and £1 million in 2028/29, totaling £5.4 million.
Simone Van Elk, Programme Manager for Corporate Transformation, indicated that detailed preparations for managing some temporary accommodation through the housing company are nearing completion, with legal agreements being drafted. So we're currently nearing the end of some very detailed preparations for managing some of our temporary accommodation through the council's housing company. There's some legal agreements that are currently being drafted. So a lot of progress has been made about working out what, one, the framework that's needed to be put in place between the council and the housing company, as well as operationally how we would manage process changes. So we're nearing the end of that at the moment.
However, the meeting identified potential for changes to housing benefit regulations
as a programme risk. Additionally, regarding the housing company specifically, it was mentioned that there is indeed a risk that benefits regulations can change.
The transfer of temporary accommodation management to the housing company is also intended to support residents, as mentioned under the objectives of the income workstream.
Further details on the programme can be found in the Public reports pack for the Housing and Homelessness Scrutiny Commission meeting on Tuesday 8 September 2026.
