Westminster City Council is set to approve the purchase of six residential properties in Lambeth for £2.3 million in early 2026, in a bid to reduce the soaring cost of housing homeless families in central London. The homes, located just south of the River Thames, will be used as temporary accommodation for households who cannot be placed in Westminster because private rents now sit far above government housing-benefit limits. As a result, the council has been forced to rely increasingly on expensive hotels and nightly-paid apartments, driving its homelessness budget sharply higher. This is reported by The WP Times, citing Southwark News and the UK Local Democracy Reporting Service.
A council under unprecedented strain
Few places in Britain feel the housing crisis as sharply as Westminster. Home to some of the most expensive streets in Europe, the borough also carries one of the heaviest homelessness burdens in the country.
Council figures show that in 2024/25 the number of households approaching Westminster for homelessness support rose by more than 30% compared with the previous year. At the same time, the net cost of temporary accommodation exploded to £66.2 million, almost double the year before and more than fourteen times higher than in 2021/22, when the bill stood at just £4.5 million.
These costs are driven by the brutal reality of the London rental market: even modest flats now routinely command rents far above the Local Housing Allowance (LHA) — the maximum housing benefit paid to low-income tenants.
When LHA does not cover the rent, councils either top up the difference from their own budgets or are forced to place families in hotels and short-term apartments, often at extortionate nightly rates.
Why Lambeth — not Westminster
In principle, London councils are expected to house homeless residents within their own boroughs. In reality, that model has largely broken down in central London, where private rents have risen far beyond the level councils can afford to pay through the housing benefit system.
Westminster officials acknowledge in council papers that sourcing suitable private-sector homes inside the borough is now “very challenging”, both for preventing homelessness and for providing temporary accommodation once families have already lost their homes. The number of households needing help has grown far faster than the supply of properties that can be secured at affordable rates.
As a result, Westminster has increasingly been forced to look beyond its own boundaries. In recent years, homeless households have been placed not only in neighbouring London boroughs but also in towns well outside the capital, including Southend-on-Sea, North Hertfordshire and South Bucks, simply because there were no suitable homes available locally.
Buying homes in Lambeth represents a less disruptive and more sustainable alternative. The borough is just across the River Thames, allowing families to remain within inner London, close to their schools, workplaces, GP surgeries and support networks. At the same time, property prices and rental levels there give Westminster a better chance of securing homes that fall within what the council can realistically afford, reducing its reliance on expensive hotels and nightly-paid accommodation.
The bigger financial strategy
The decision to buy homes in Lambeth is not a one-off response to a single shortage, but part of a much wider financial and housing strategy adopted by Westminster City Council to stabilise its homelessness budget.
The council has already approved £253.8 million in capital funding for temporary accommodation between 2024/25 and 2026/27. This programme is designed to cut Westminster’s growing dependence on hotels and privately run nightly-paid flats, which have become the most expensive and least stable form of emergency housing.
Instead of paying open-ended bills to the private sector, Westminster is working to build up its own portfolio of homes that it can control. Through a combination of long-term leasing and direct property purchases, the council plans to expand its temporary accommodation stock from around 4,250 homes today to more than 6,000 by 2027/28. That would represent one of the largest council-run temporary housing estates in London.
The financial logic behind the strategy is straightforward. As the number of homeless households has risen, Westminster’s spending on short-term accommodation has surged, with hotels and nightly-paid apartments often costing far more per family than a leased or owned home. By investing in properties itself, the council aims to bring down the average cost per household, reduce exposure to volatile rental markets, and provide more stable, suitable housing for families who may need to stay in temporary accommodation for months or even years.
In effect, Westminster is attempting to shift from crisis-driven spending to long-term asset ownership — replacing unpredictable hotel bills with bricks and mortar that can be used repeatedly to meet its statutory housing duties.
Why rents and benefits no longer align
At the centre of London’s homelessness crisis is a widening gap between what homes actually cost and what the state is prepared to pay for them.
Local Housing Allowance (LHA) — the maximum level of housing benefit that low-income households can receive — is set by central government. For several years it was effectively frozen while private rents across London rose sharply. Although LHA has been increased more recently, it still remains well below the market rent for most properties in large parts of the capital, particularly in high-cost boroughs such as Westminster.
The result is a systemic mismatch. Private landlords are unwilling to let homes at LHA rates, councils cannot afford to top up rents indefinitely, and yet local authorities remain under a legal duty to house anyone found to be homeless. That forces councils to fall back on hotels and short-term lets, which are often far more expensive than ordinary tenancies.
Westminster’s housing officers warn that this gap between benefit levels and real-world rents is no longer a temporary problem caused by market volatility. It has become a structural risk to council finances, leaving boroughs exposed to escalating costs that they have little power to control under the current national funding system.
What this means for Londoners
For families facing homelessness, Westminster’s decision to buy homes in Lambeth could mark a meaningful shift away from prolonged stays in hotels and hostels. Access to self-contained flats offers greater privacy, better living conditions and, crucially, more stability for children who need to remain in the same schools and healthcare systems while their families rebuild their lives.
For council taxpayers, the move signals a broader change in how local authorities are being forced to operate. Rather than acting purely as providers of social services, councils are increasingly becoming property owners, not out of strategic ambition but because the private rental market has become too expensive and too unreliable to depend on for emergency housing.
In boroughs such as Lambeth, the impact is more complex. While the homes will be owned and managed by Westminster, the households living in them will rely on local schools, GP surgeries and social services, raising sensitive questions about capacity and funding when one borough places vulnerable residents inside another’s boundaries.
A London-wide problem, not just a Westminster one
Westminster is far from alone in turning to out-of-borough housing. From Camden in the north to Newham in the east, councils across London are now buying or leasing homes beyond their own borders to meet their statutory homelessness duties.
What sets Westminster apart is the scale of the pressure it faces. With some of the highest rents in the country, the borough has become one of the largest spenders on temporary accommodation in the UK. As 2026 begins, there is little indication that either rental prices or homelessness demand are easing, leaving councils with few alternatives but to continue expanding their housing estates beyond their traditional boundaries.
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