Folkestone & Hythe District Council’s Plan to Cut Temporary Accommodation Costs

Cabinet backs a £5m plan to buy 20 council-owned homes for temporary accommodation and temporarily switch up to 20 existing council properties — as usage has doubled from ~55 to ~115 households in a year.

At a meeting on Wednesday 15 October, Folkestone & Hythe District Council set out a blunt picture of rising homelessness costs. A report to Cabinet said the number of households in temporary accommodation (TA) has leapt from about 55 to roughly 115 in 12 months, with most placements in private “nightly-let” rentals. Because the Government only reimburses a capped share of these private costs, the council expects its net TA pressure to hit about £1.2m in 2025/26, up from £600k last year. 

What was agreed

• £5m capital (within the Housing Revenue Account) to acquire/deliver at least 20 council-owned TA homes this year, with officers authorised to apply for Homes England support where eligible.

• Use up to 20 existing council (HRA) homes as TA as they fall vacant over the next 12 months, with tight monitoring so permanent lettings don’t stall.

• Delegated authority to the Director of Housing & Operations to move quickly in the market. 

Why this helps the bottom line: the report explains that when the council uses its own stock for TA, it can reclaim 100% of the rent via Local Housing Allowance, eliminating the “negative subsidy” that hits the General Fund on private nightly-lets. Using council stock is modelled to reduce the subsidy gap by around £280k per year (before borrowing costs).

What’s already secured: Alongside this package, the council has moved to secure more homes into the HRA: 44 at Risborough Barracks (Taylor Wimpey) approved by Cabinet, 26 at Sutherland Park, Hythe confirmed for council purchase, and a further 19 via a Section 106 acquisition with Pentland Homes in New Romney/Lyminge now moving through implementation. In round numbers that’s 70 homes formally approved/secured, with another 19 “in train”—~89 in the pipeline—although the precise savings depend on when each scheme completes and handovers start to reduce reliance on costly nightly-lets.

Why The Bill Is Rising

• Subsidy rules: For private nightly-let and B&B placements, the council can only reclaim 90% of the 2011 LHA rate, leaving a large shortfall. A worked example in the report shows a typical 2-bed nightly-let at £385/week yields only £114/week in eligible benefit — leaving the council with a £271/week hit. 

• Where people are housed today: about 93 households are in private nightly-lets, with 8 self-contained units held in the General Fund and 15 council (HRA) homes already being used as TA. B&B is limited to emergencies.

• Deputy Leader Cllr Tim Prater told the meeting TA now equates to about 5% of the council’s annual budget — roughly £1.2m — and backed the plan as the most financially rational option in the circumstances.

A Cap That’s Already Under Strain

In April 2025 the council appointed a panel of ten emergency accommodation suppliers and capped the contract value at £400,000 for the initial term to 31 October 2025.

However, the council’s published Payments to Suppliers ledgers show combined outlays to emergency accommodation providers of roughly £441,000 between April and July 2025 — effectively outstripping the cap within four months. (This figure is derived from payments to the named panel suppliers across the April–July files.) 

Plain English takeaway: nightly-paid rooms are expensive and only partly reimbursed, so the council pays the difference. Buying or using its own homes for TA cuts that loss and gives families better, self-contained accommodation.

The Bigger Problem: Not Enough New Homes

The council’s Planning & Licensing Committee papers in September confirmed Folkestone & Hythe can currently demonstrate only a 3.1-year supply of deliverable housing land — well below the five-year requirement. Under national planning rules this triggers a presumption in favour of sustainable development (the “tilted balance”), but in practice it still means too few genuinely affordable homes coming through, so people stay stuck in TA for longer.

Is The £5m Package Enough?

It’s a necessary first step that should reduce the annual deficit on TA and improve the quality of placements. But the report itself is clear: if demand keeps rising, further measures may be needed — and using too many council homes as TA risks slowing permanent lettings and lengthening waiting times. It’s a balancing act, not a silver bullet.

What Else The Council Can Now (Practical, Feasible Options)

1. Lock in better prices: Convert ad-hoc nightly bookings into short, fixed-term block deals (or head-leases) with panel suppliers to secure lower unit rates and guaranteed availability. This is often cheaper than night-by-night.

2. Private-sector leasing with guarantees: Offer landlords 3–5-year leases with guaranteed rent, light repairs and nil-voids so properties move from nightly TA to settled tenancies at a lower net cost.

3. “Meanwhile” homes & conversions: Bring vacant upper floors and empty short-let properties into use with minor works or modular conversions on council land for purpose-built TA — faster and cheaper to run than hotels. 

4. Accelerate move-on: Increase rent deposit/bond support and targeted incentives so households can move out of TA into the private rented sector sooner, freeing units and shortening stays.

5. Prevention that pays: Scale arrears mediation, Discretionary Housing Payments and landlord liaison/incentive schemes to stop evictions at source. These are typically the lowest-cost interventions per household avoided.

6. Regional buying power: Work with neighbouring districts on a shared procurement framework for TA to cap rates and raise minimum standards.

7. Guard the HRA: Publish a simple quarterly dashboard showing how many HRA homes are diverted to TA, the impact on lettings, and the savings to the General Fund — so residents can see the trade-offs in real time. 

Bottom Line

Cabinet’s plan is pragmatic and cost-savvy: expanding council-owned TA is the quickest way to stop the financial bleeding from expensive nightly-lets and give families better places to live. But with only a 3.1-year housing land supply, the real fix is more affordable homes and fewer avoidable evictions. Treat this £5m as Tranche One — and pair it with aggressive prevention, smarter procurement, and faster delivery of new affordable housing — or the TA bill will keep climbing.

The Shepway Vox Team

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