Kingston Council had intended to set up a company to manage 150 homes as permanent rental properties
A South London council has scrapped plans which would have allowed it to move homeless families out of temporary accommodation.
Kingston Council officers ruled proposals to set up a special purpose vehicle – a company created for an individual project – to buy 150 homes to rent out to people on its housing register were not commercially viable.
The council will instead use these properties as temporary accommodation, which it said still means residents will benefit from “stable and sustainable housing” at affordable rent.
The authority agreed plans last year to buy 150 properties for £63.1million and lease them to the company at £975 a month.
The company would have leased these homes to tenants at rents set to the local housing allowance rate, which determines the maximum support available for renters, with the first properties to be let this spring.
This would have allowed the council to discharge its housing duty to these people, so they were no longer on Kingston’s waiting list.
But a new report by officers said national economic changes and new modelling showed the company would not be commercially viable, including the predicted rental income being lower than previously forecast.
The council will instead use the properties as temporary accommodation, with it looking to begin acquiring and moving families into them this financial year.
The report said this would not allow the authority to discharge its housing duty as local authorities could not grant periodic tenancies, but “would still provide stable and sustainable housing for homeless households at an affordable rent”.
It said the scheme will reduce the authority’s reliance on placing homeless people in expensive emergency accommodation, including hotels, as it grapples with rapidly rising demand and costs.
Housing applications to the council rose from 30 a month in March 2023 to 80 a month in March 2025. More than 1,000 households were in temporary accommodation in the same month, pushing net costs from £9.3m in 2023/24 to an expected £12.1m in 2025/26.
The council approved a new temporary accommodation acquisitions strategy in July 2024, with a focus on buying more property to help residents in need of such housing.
The strategy has allowed it to add more than 100 new homes to its stock so far, on top of the 150 properties it is now moving ahead with using as temporary accommodation.
Matthew Essex, Executive Director of Place, told the council’s Corporate and Resources Committee on June 25 it was a “shame” the company was not commercially viable, as the authority was hoping to discharge its housing duty to residents through the 150 properties. But he said it meant these residents would stay as high priority for permanent council housing.
He said keeping the properties as temporary accommodation was also more straightforward and would improve transparency as there would not be a separate company structure overseeing them.
Lib Dem councillor Cllr Mark Durrant said he was “not particularly bothered about how it is done, as long as it is done”.
He said emergency accommodation was a “worse solution for families” who had fallen onto hard times and needed help from the council.
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