Hundreds of households living in temporary accommodation in central London are set to see their rents increase by £90 per week under new plans from their local authority.
Budget Pressures Force Rent Increase
Westminster City Council has stated the rise is "essential and proportionate" to stabilise its temporary accommodation (TA) budget, which is forecast to overspend by a staggering £12.5 million this financial year. The increase is scheduled to take effect from February 2026.
The change will impact residents in 352 council-owned homes, representing more than half of the council's own TA housing stock. It will not apply to households placed in privately-owned temporary accommodation managed by the council.
Aligning with Market Rates
The council aims to bring rents for its own TA properties in line with current Local Housing Allowance (LHA) rates. Until now, rents have been capped at 90% of the 2011 LHA rates, with a maximum of £500 per week. A recent government review now permits councils to charge based on current rates.
"The changes are in line with government guidance on Local Housing Allowance rates for directly owned temporary accommodation," said Councillor Liza Begum, Cabinet Member for Housing Services. She added the move would "improve the sustainability of this budget."
The council reports that the increase is expected to generate an additional £1.8 million annually.
Support for Affected Households
The council emphasises that a significant safety net is in place. According to their analysis, 279 households (91%) will have the increase fully covered by Housing Benefit and will see no change in their out-of-pocket expenses.
For the remaining households, a new Rent Support Fund has been established. This fund will provide welfare advice and help residents access broader cost-of-living assistance. The 16 households receiving no housing benefit will be offered a "tailored support package."
"All those directly affected will be offered financial support," Cllr Begum assured. Affected residents will be formally notified of the changes in early January 2026.
Unprecedented Demand Drives Crisis
The council cites "unprecedented pressures" on its TA budget, driven by a dramatic surge in homelessness applications and escalating market costs. Between 2021 and 2025, homelessness applications in Westminster more than doubled.
As of September 2025, 4,416 households were living in temporary accommodation within the borough. This number is projected to rise by over 600 households by April 2026.
The primary causes of homelessness are identified as the end of private rented tenancies, family or friends no longer being able to accommodate individuals, and domestic abuse. With limited options for moving households into permanent social housing, the council's reliance on TA—and its associated costs—continues to grow.
The proposed rent increase forms part of a wider strategy to manage a budget with a net value of £50.1 million. The council also recently finalised plans to purchase 368 properties it previously leased as TA, indicating a long-term shift in how it manages its housing portfolio.
