In a bid to phase out the use of costly migrant hotels, the Labour government is calling on private landlords to step up and help house asylum seekers, according to a report by The Daily Telegraph. The move is part of a broader strategy aimed at reducing taxpayer spending and easing pressure on the asylum accommodation system.
Labour’s latest announcement follows a pledge made during last week’s Spending Review to eliminate the use of hotels for housing migrants—a measure projected to save the public purse around £1 billion annually. Government figures show that housing asylum seekers in hotels currently costs £145 per person per night, compared to just £14 for private sector accommodation.
Despite the potential savings, critics warn the strategy may intensify competition in an already strained rental market.
Opposition Sounds Alarm Over Housing Pressures
Shadow Home Secretary Chris Philp voiced concerns about Labour’s plan, warning that the shift to private rental sector (PRS) housing could reduce availability for British citizens.
“No matter how much Rachel Reeves may claim Labour will get the backlog of asylum claims down—immigrants will still need a place to stay,” Philp told The Telegraph. “With experts warning the Government will get nowhere near their target of 1.5 million new homes, the British people must come first when it comes to access to housing.”
He also criticized the potential displacement effect on young British renters, stating that “accommodating illegal immigrants in flats takes up valuable space needed by our own young people.”
Nathan Emerson, Chief Executive of Propertymark, echoed concerns about pressure on the market, noting that there is currently an average of seven applicants for every available PRS home.
Private Sector Incentives and Concerns
In response to the housing shortfall, the Home Office has been working with three major contractors—including outsourcing giant Serco—to boost PRS availability for asylum accommodation.
Serco is reportedly offering landlords five-year guaranteed rental agreements, with full rent paid on time, complimentary property management services, and coverage of all maintenance, utilities, and council tax. The aim is to incentivize landlords amid rising demand and reduce the government’s reliance on temporary hotel stays.
According to the National Audit Office, housing asylum seekers could cost the UK up to £15.3 billion—a staggering increase from the £4.5 billion estimate set by the previous Conservative government in 2019.
Despite a 15% drop in hotel use between December and March—down from 38,079 to 32,345 asylum seekers—financial pressures remain high.
Local Authorities Urge Early Involvement
The Local Government Association welcomed the move to close asylum hotels but emphasized the importance of involving councils early in the planning process to ensure smooth implementation.
Prime Minister Keir Starmer, who campaigned on a promise to end the use of hotels for migrant accommodation, now faces mounting pressure to deliver that commitment while addressing growing tensions in the housing market.
As Labour walks a tightrope between cost-saving measures and domestic housing concerns, the success of this policy may depend on the government’s ability to balance national priorities with humanitarian obligations.