Councils across England are spending tens of millions of pounds in incentive payments to private landlords to house homeless families, raising concerns about a “senseless waste of public money.” According to data from campaign group Generation Rent, 37 councils spent over £31 million on one-off cash payments to landlords in 2024-25.
The figures, obtained through freedom of information requests, cover the 32 London councils and 10 authorities outside the capital with the most severe statutory homelessness pressures.
Landlord incentives rise sharply in London
In London alone, spending on incentives to private landlords has jumped 54% since 2018. The payments are meant to prevent families from being placed in temporary accommodation, but campaigners argue the system is unsustainable.
Ben Twomey, chief executive of Generation Rent, said rising rents and a freeze on local housing allowance have left councils with little choice. “They’re forced to pay individual landlords tens of thousands of pounds just for them to agree to rent out their home. It’s a senseless waste of our public money,” he said.
Councils under financial strain
Manchester City Council topped the list, spending £3.3 million in 2024-25, followed by Enfield (£2.7m), Ealing (£2.3m), and Birmingham (£1.7m). Many of these councils are already facing budget deficits. Manchester reported an £18m shortfall earlier this year, while Birmingham declared itself effectively bankrupt and made record cuts.
The highest single landlord payment recorded was £15,385 by Southwark Council in London. In 2018, only one London council reported a £10,000-plus payment, compared with six in 2024-25.
Calls for reform in rental market
Twomey described the UK rental market as “like the wild west,” accusing landlords of exploiting councils. He urged the government to unfreeze local housing allowance and give metro mayors powers to cap rent increases.
Chris Norris, policy director at the National Residential Landlords Association, said landlord incentives reflect “an enormous shortfall between local housing allowance rates and market rents.” While calling the practice “a poor way of funding the housing system,” he admitted it is “probably the least bad option” for local authorities facing housing shortages.
Councils defend incentive payments
Some councils defended the use of landlord incentives as a necessary response to the scale of homelessness. Birmingham said payments were essential given that more than 25,000 people are on its housing register. Ealing argued the payments helped households overcome barriers like affordability or poor credit history.
Grace Williams of London Councils said the capital faced “the most extreme homelessness emergency in the country.” She added that working with private landlords was a better option than relying on costly hotels and B&Bs, which are limited by law to six weeks.
