Councils across England have been accused of wasting public funds after new data revealed they paid private landlords more than £31m in cash incentives last year to house homeless families.
Figures obtained by campaign group Generation Rent through freedom of information requests show that 37 local authorities made 10,792 one-off payments to landlords in 2024–25. The data shows how councils under financial strain are increasingly relying on cash sweeteners to secure accommodation, rather than placing families in temporary housing.
The practice is most pronounced in London, where spending on landlord incentives has risen by more than 50% since 2018. The capital’s boroughs face some of the highest homelessness pressures in the country, with competition for affordable properties at record levels.
Manchester City Council topped the list of spenders, paying out £3.3m during the year. Enfield followed with £2.7m, while Ealing spent £2.3m and Birmingham £1.7m, the Guardian reported.
All four authorities are grappling with budget deficits, with Manchester reporting an £18m shortfall earlier this year and Birmingham announcing unprecedented service cuts after declaring itself effectively bankrupt.
Some of the payments were substantial. Southwark Council in south London handed a landlord £15,385 in a single transaction, while several other authorities frequently paid sums exceeding £10,000.
In 2018, only one London council reported such high-value payouts; by 2024–25, at least six had done so.
Generation Rent’s chief executive, Ben Twomey, said councils had been forced into a “near impossible position” by soaring private rents and the government’s freeze on local housing allowance.
He called the payments “a senseless waste of our public money”, warning that some landlords were exploiting the system.
The National Residential Landlords Association (NRLA) also voiced concerns. Policy director Chris Norris argued that while the payments helped some landlords take on higher-risk tenants or cover costs, they reflected a “poor way of funding the housing system”. He stressed that without changes to welfare support, tenants reliant on benefits would remain locked out of the market.
Local authorities have defended the strategy, insisting that the payments are a pragmatic way to avoid relying on hotels and B&Bs, which are both costly and unsuitable for long-term housing.
A spokesperson for Manchester City Council said the private rented sector offered “better value for money and more secure housing” than emergency accommodation.
Birmingham City Council described the payments as a “necessary” response, with more than 25,000 people currently on its housing register.
London Councils, the cross-party group representing the capital’s boroughs, acknowledged the high costs but said they were operating under “the most extreme homelessness emergency in the country”.
Campaigners are urging ministers to unfreeze local housing allowance rates and grant metro mayors powers to regulate rent increases.