Temporary Accommodation Costs Hit Record High at Folkestone & Hythe District Council, Passing £1m

Folkestone & Hythe District Council’s spending on temporary accommodation has now crossed £1,052,870 in the current financial year, according to the council’s published “payments to suppliers” data compiled from categories including B&Bs, hotels and self-contained nightly lets.

It is the highest figure the council has ever recorded in their supplier-payments dataset — and what makes it more striking is that it has been reached with around three months of the financial year still to run, meaning the total is not yet the final outturn and may rise further once the remaining payments are published.

Yet the surge has not come out of nowhere. Both the council’s own reports and Shepway Vox’s running analysis have been warning for months that temporary accommodation costs were on a steep upward path, driven by a larger homeless caseload, tightening private rentals, and a national funding formula that leaves councils paying a growing share of the bill.

Behind the money: a growing queue for emergency housing

The council’s October 2025 Cabinet report put the scale of local demand in plain terms: around 115 households were in temporary accommodation at the time, up from about 55 a year earlier. Most were being housed in the private sector: around 93 households in privately provided nightly-let accommodation, with additional use of council-held units (including Housing Revenue Account properties) to plug gaps.

Quarterly performance reporting shows the pressure building through 2024/25. The council’s own indicators recorded an average temporary accommodation caseload in the 50s and 60s earlier in the year, rising sharply by the final quarter. In other words, the rising spend is not simply a pricing story; it reflects more households needing somewhere to stay, for longer.

And “temporary” is increasingly a misnomer. What was designed as a short stopgap is, in practice, becoming a holding pattern — especially for people with more complex needs, and for families who cannot find a settled private tenancy at the rents now being asked locally.

Why costs rise so fast: the subsidy gap

A key part of the story is not visible in the supplier totals. The council distinguishes between gross payments (what it has to hand over to providers) and the net pressure left behind after government support.

The Cabinet report describes the problem as a “negative subsidy” impact: where the council uses privately supplied nightly-let or B&B accommodation, it can only reclaim housing benefit subsidy up to a capped amount linked to older Local Housing Allowance levels, leaving a large shortfall that falls back on the council’s general fund.

The report gives a worked example that shows how quickly the maths turns ugly: a privately sourced two-bedroom nightly-let property can cost hundreds of pounds per week, while the reclaimable subsidy is far lower — meaning the council ends up paying a significant share itself. On the council’s figures, the net cost of a comparable private nightly-let two-bed can be many times higher than using council-owned stock.

This is precisely why the new record spend was not unexpected. In the same October 2025 report, officers projected the temporary accommodation subsidy shortfall rising to around £1.2m.

What the council is doing: buy its way out of the nightly-let trap

Ministers often tell councils to “manage demand”, but the council’s reports make clear that management only goes so far when the legal duty to accommodate applies and the private market supply is tight.

So Folkestone & Hythe is trying something more concrete: own more of the temporary accommodation it relies on.

Cabinet approved a plan to invest £5m to acquire (or deliver) at least 20 additional properties for use as temporary accommodation, alongside temporarily switching more existing council homes into this role as they become available. The stated logic is twofold: reduce exposure to the nightly-let market and create a longer-term housing asset for the district.

The council’s public messaging has been unusually direct. In October, the housing portfolio holder said the rise in homeless households was happening “nationally”, and argued that providing accommodation directly “provides better value for money and delivers a long-term housing asset”. In January, the deputy leader for finance framed the same £5m investment as a way to both respond to homelessness and shield the council’s budget from the “rising cost of short-term rentals”.

There is, of course, a trade-off: every council property used as temporary accommodation is a property not immediately available for permanent letting. The council says it intends to monitor this carefully, but the underlying point remains: when the private rented sector becomes unaffordable or unavailable, local government ends up juggling shortages from one part of the system to another.

The national backdrop: Folkestone & Hythe is not an outlier

This is not a quirky local budgeting mishap. It is a national housing emergency showing up in council balance sheets.

Official homelessness statistics show over 131,000 households in temporary accommodation in England at the end of March 2025, rising year-on-year. Shelter’s analysis of council spending for 2024/25 put the England-wide bill at around £2.8bn, up sharply in a single year. The Local Government Association has repeatedly highlighted the growing funding gap created by subsidy rules that do not match real-world rents.

In that context, Folkestone & Hythe’s £1.05m-plus tally is best understood as a local snapshot of a much larger national failure: too little genuinely affordable housing, rents rising faster than incomes, and a safety net that leaves councils paying for the consequences.

Highest ever — and still heading in the wrong direction

So yes: this is the highest temporary accommodation spend the council has recorded in its supplier-payment data.

But it is also the outcome the council’s own papers were already pointing towards: more households presenting as homeless, a heavy reliance on nightly-let placements, and a subsidy system that guarantees a widening shortfall.

The bigger question is what happens next. Buying more temporary accommodation may reduce the immediate leak in the budget, but it does not fix the upstream causes: the shortage of settled homes people can afford, the churn in private tenancies, and the reality that “temporary” placements are increasingly long stays.

Until those underlying pressures ease, the danger for residents and taxpayers is straightforward: today’s record becomes tomorrow’s baseline.

The Shepway Vox Team

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