Councils pay millions to firms moving homeless families out of big cities

Councils in England are paying millions to relocation companies to move homeless families out of cities and the south-east in a practice that has been called a "national scandal".

- Sammy Gecsoyler

A Guardian analysis of local government spending data shows that councils in London and Birmingham, and more than a dozen local authorities across the south-east of England, paid more than £5.2m to firms that facilitate moves to cheaper parts of the country since 2020.

The companies find homes in areas where rents and local housing allowance (LHA), the amount those claiming housing benefit can claim, align. Rents in much of the country have not kept pace with LHA, meaning these properties are often located in smaller, deprived towns in the Midlands and north of England.

Those relocated are discharged into the private rented sector and deemed permanently rehoused. Usually, any connection with the original council ends, making it near impossible for them to return home.

In London, families in temporary accommodation, which is paid for by councils, are sometimes given only 24 hours to accept the offer of a new home in another part of the country and are told they will be kicked out of emergency housing if they refuse.

Experts raised concerns about what they called "social cleansing" and "racialised, coercive displacement", where people of colour are moved to largely white areas. MPs in the north-east said people were being relocated to already deprived communities with no additional support.

Among the companies helping to relocate tenants is Reloc8 UK. Local authorities in London and Birmingham city council have paid the firm at least £3m since 2020, with more than £1.2m of this paid in the past year.

The use of these firms appears to have increased year on year, with a sharp rise in payments by councils in 2023 and 2024. When taking account of all the firms identified by the Guardian, 30% of the £5.2m sum has been paid in the past year alone.