We welcome the announcement from Angela Rayner that £500m will ‘top-up’ the affordable homes programme, enabling councils and Housing Associations to fund the building of more social homes. However, there needs to be greater recognition that building alone will not solve the housing crisis in the short and medium term.

In urban environments where space is at a premium and costs are high, we need increased funding for Local Housing Allowance (LHA) rates and measures to keep good landlords in the Private Rented Sector.

London Boroughs collectively spend £114m a month on temporary accommodation (TA) for the 65,000 households who are experiencing homelessness. That figure is increasing month on month and building new homes will not solve this any time soon.

In April ’24 the last Conservative Government increased Local Housing Allowance (LHA) to return it to the level it should have been – covering the lowest 30% of an areas rental market. It was both immediately frozen, and immediately outpaced by rent inflation. In London 5% of homes advertised for rent are now affordable on LHA rates – 7 months after the increase.

At the end of the last parliament the Renter’s Reform Bill died as the election was called, and it’s now been resurrected as the Renter’s Rights Bill, which is all but identical. We completely support the bill and agree that the PRS needs to have greater protections for renters and landlords; however, it comes at a time when smaller landlords, who are more likely to rent to households at the lower end of the market (i.e using LHA), are leaving the sector. The drain began because of the economics, the fiscal environment, the post Truss mortgage rates on buy-to-lets, the maturing of a lot of buy-to-let products, but continues as it looks more difficult and costly to be an ’accidental’ landlord – those who may have inherited property and wanted to use it for income. The PRS sector is shrinking as a result.

It’s not just costly to be a small landlord, but it feels increasingly hostile – as borne out by recent London Councils, Trust for London and Savills research.

Yes, we need to build, let’s get homes for everyone that needs them, but that’s a multi-year, multi-parliament project, even with expedited planning, and grant allocation, and building we are years away from making a significant dent on the waiting lists let alone the 117,450 households currently experiencing homelessness and living in TA in the UK. And it relies on a construction industry that is ready to step up to the challenge.

We need to have an annual increase in LHA rates to get families out of TA. We need to incentivise smaller landlords to stay in the sector, with tax breaks and with help to implement the Renter’s Rights Bill provisions. We need to recognise that smaller landlords, more likely to let to those claiming LHA, are a hugely important piece of a housing journey. We need to create the right environment that encourages others to enter the PRS market to increase the number of homes available and chip away at the thousands of households that are languishing in TA.

Sue Edmonds, Capital Letters CEO

The growing reliance on TA is placing a severe strain on London boroughs and their ability to deliver other essential services.

As of March 2024, 65,280 households, including 86,810 children, are currently living in TA across the capital.

The financial cost of TA is unsustainable, with London Councils estimating that councils in the capital are collectively spending £114 million per month, equating to over £1 billion annually.

This strain is stretching council budgets to breaking point. London Councils’ latest analysis showed that councils across London could face a combined £700 million budget shortfall if this situation persists.

Boroughs are diverting resources away from other critical services in order to manage this escalating TA demand. The strain is most acute in boroughs with higher levels of homelessness, where the percentage of local budgets spent on TA is crippling their ability to invest in long-term affordable housing.

TA often places families in unsuitable conditions, including hotels or nightly-paid accommodation away from their support networks. This instability leads to further negative outcomes, particularly for children, whose education, mental health and well-being are adversely affected by frequent moves and insecure living conditions.

Capital Letters’ research suggests that councils save an average of £12,000 per household per year moving from TA to a home with rents at the Local Housing Allowance (LHA) rate. This highlights the need for urgent action to increase affordable housing supply, as these savings could be redirected into other vital services or reinvested into long-term housing solutions.

The Supply Challenge: A Severe Imbalance Between Demand and Affordability

The severe shortage of affordable rental properties in London has exacerbated homelessness and forced more families into TA. Recent analysis undertaken by Savills, commissioned by London Councils and Trust for London, underscores just how precarious the situation has become:

  • Only 5% of rental listings in London were affordable for households receiving Local Housing Allowance (LHA) between July and September 2024. This represents a sharp decline compared to 18.9% in 2020-21, highlighting the growing affordability crisis in the capital that is leaving thousands of families at risk of homelessness.
  • 45,000 private rental properties were sold between April 2021 and December 2023 without replacement, equivalent to 4.3% of London’s entire rental housing stock. This shrinkage in supply has disproportionately affected low-income families who rely on the availability of affordable private rental homes.
  • The most affordable areas in London are losing rental properties at a faster rate than wealthier neighbourhoods. Properties in these areas are being removed from the rental market at a rate of 3.3% per month, compared to 2.6% in the rest of London.

The supply-demand imbalance is pushing rents even higher, with rents rising by 9.7% in the year to June 2024. Such steep rent inflation is leaving many families – who might have previously been able to afford private rentals – unable to secure permanent housing, pushing them into TA.

This issue is compounded by the broader contraction in London’s buy-to-let market. According to Zoopla, 13% of homes for sale in October 2024 were previously rental properties, with many landlords being forced to sell due to rising mortgage rates. The majority of these sales are concentrated in London and the South East, worsening the already dire shortage of affordable rental homes.

Capital Letters’ Calls for Action

The shortage of affordable housing and the rising costs to London councils of TA are challenges which are interconnected with broader issues in London’s housing market and the benefit system.

Our four key recommendations below aim to create long-term solutions to relieve the strain on boroughs, reduce homelessness and ensure that more families can access stable, affordable housing.

A Homelessness Strategy that Spotlights the TA Crisis
We welcome the Government’s commitment to a cross-government strategy to end homelessness. Whilst tackling rough sleeping is a key part of this, any such strategy must also focus on reducing the significant number of households, and particularly families, in temporary accommodation.

Investing in the Benefits System for Long-Term Savings
London Councils found that an additional 16,500 to 22,000 London households could face homelessness over the next six years if the LHA rate is not permanently unfrozen. Ensuring that LHA permanently covers the lowest 30% of local rents could save over £100 million annually in public spending by reducing homelessness costs.

However, it is not just the LHA that needs attention. Before the LHA increase, more than 25,000 households in London had their income reduced as a result of the benefit cap. The Resolution Foundation found that not increasing the cap at the same time as unfreezing the LHA meant that thousands of households would receive limited or no extra income.

We are calling on the Government to:

  • Permanently align the Local Housing Allowance (LHA) with the bottom 30% of local rents to ensure it keeps pace with rising rent levels.
  • Remove the overall benefit cap and the two-child limit to prevent more families from falling into homelessness. These caps disproportionately affect low-income families and those with young children, making it increasingly difficult for them to secure suitable housing.

Bringing Empty Homes Back into Use
Across London, there are just over 36,000 long-term empty homes – i.e. those that have been vacant for over 6 months. This does not include second homes and those going through probate. If these homes were brought back into use, they could house half of the households currently in TA in London.

The Government should prioritise bringing these properties back into use by creating a National Empty Homes Strategy. This could also include:

  • Ringfencing some of the Affordable Homes Programme funding to support bringing long-term empty homes back into use or create a dedicated Empty Homes funding pot.
  • Councils could also be required to ring fence money coming from the empty homes tax to invest in further measures, such as increasing staffing resources to engage with owners, which would result in more empty homes being brought back into use.


Stronger Regulation of Short-Term Lets (STLs)
In May, London Councils estimated that there were at least 43,000 short-term lets in the capital, equivalent to one in every 85 London homes. The proliferation of STLs is driving up rents and exacerbating the housing crisis by reducing supply for permanent residents.
We support Sadiq Khan’s previous calls to implement a local licensing scheme for STLs that would limit the number of licenses granted for short-term lets and enforce stricter compliance with the 90-day rental cap to ensure that these homes remain available for long-term tenants.

Capital Letters, the unique socially responsible not-for-profit owned by London boroughs has taken over management of 18 properties seized from a rogue landlord by member borough Merton Council.

The 18 properties were subject to an ‘Interim Management Order’ when Merton Council ascertained that they were un-licenced and that there was no reasonable prospect of the tenancies being licenced soon.

Capital Letters will manage the properties on behalf of the council, with a focus on bringing the properties up to a safe standard.

Elizabeth Harper Capital Letters’ Director of Operations said “It’s both exciting to help one of our member boroughs take this bold step and distressing to know that tenants were living in dangerous unlicensed homes.

“Capital Letters is a landlord in our own right, so we have the expertise, the systems, and the knowledge to be able to manage these properties and ensure that they are made safe and brought up to standard.”

“Our unique position strengthens our member’s ability to issue Interim Management Orders, by working with Merton Council we are showing our member boroughs that we are ready to step in and ensure Londoners have a safe, secure, and good quality home.”

The Interim Management Order will remain in place for 12 months.

Did you know that last year the whole of Belfast was either threatened with homelessness or already homeless?

OK, not actually Belfast – but 324,990 households in the UK, which is about the same size as Belfast. That’s half a Glasgow, most of a Cardiff, most of a Croydon, 70% of a Leicester, nearly 2 Readings, 2 Cheltenham’s, or 141 Chalfont-St-Giles’s…

A whole Belfast is owed a duty – meaning their local authority must help, prevent, or relieve homelessness.

That could mean finding Temporary Accommodation… but there’s already a full Rotherham in Temporary Accommodation!

From March 2023 to March 2024, these figures have increased by 92% year on year.

We work with our member London boroughs to find secure, safe, affordable, and good quality homes for households in Temporary Accommodation.

But we need a cross-departmental national strategy for Temporary Accommodation and Homelessness, because if we see another 92% increase…

We’re going for a full Manchester.




Capital Letters is committed to addressing the housing crisis in London by supporting innovative solutions that increase the supply of affordable rental homes.

The “Get SMEs Building Again” report provides a robust framework to address some of the current issues with building and providing affordable rental homes for those that need them most. The future of affordable housing in London could be improved by the SME housebuilding sector.


Supporting SMEs: A Key to Solving the Housing Crisis


The report highlights that SMEs now build just 10% of the UK’s housing stock, a significant drop from the 40% they contributed in the 1980s. This decline has been exacerbated by a complex planning system, high upfront capital requirements, and limited access to land.


We recognise that revitalizing the SME sector could be one of the keys to meeting the government’s target of building 300,000 homes annually. Like Capital Letters, SMEs have the agility and local expertise to develop smaller, often overlooked plots of land, which are ideal for affordable housing. By supporting the initiatives outlined in the report, we believe we can create more vibrant, sustainable, and mixed economy housing that benefits all Londoners.


Key Sections of the Report: Paving the Way for Affordable Housing


Several sections of the report stand out for their potential to help drive the building of more affordable rental homes in London.

  1. Empowering Homes England to Support SMEs
    The report calls for new ways to help Homes England to provide tailored support to SMEs, including innovative funding solutions. SMEs need to overcome the financial barriers that currently hinder their participation in the housing market. By creating a more supportive financial environment, SMEs can take on more projects, particularly those focused on affordable housing.
  2. Small Sites Planning Policy
    This policy would introduce a presumption in favour of development for small brownfield sites, streamlining the planning process for SMEs. The report estimates that this change could unlock up to 110,000 new homes within walking distance of public transport in London’s largest urban areas. We strongly support this initiative. As we become a large scale landlord, good quality urban development will drive our housing stock, giving real affordable rental homes.
  3. Implementing Quotas for SME Housebuilders in the Local Plan Process
    By ensuring that a percentage of sites in local plans are allocated specifically to SMEs, this policy would help level the playing field and encourage more small and medium-sized enterprises to enter the market. This would not only boost competition but also diversify the types of housing available, catering to a broader range of needs.

Capital Letters’ Commitment to Action


We believe that by fostering a supportive environment for SMEs, we can directly contribute to increasing the supply of affordable homes in London. We are ready to collaborate with government, local authorities, and SMEs to implement these recommendations and drive meaningful change.


By supporting SMEs and adopting the proposed policies, we can make significant strides towards creating a housing market that is inclusive, affordable, and sustainable.

Since Capital Letters was created, we have been calling for a fairer and more economically connected benefits policy.

We campaigned for an increase in Local Housing Allowance (LHA) to help the thousands of Londoners stuck in Temporary Accommodation (TA) into a safe, secure and affordable home. However, we also campaigned for a commensurate rise in the Benefit Cap – including the two-child cap – so that the LHA increase didn’t inadvertently cause homelessness, as families hit the top of their benefits and couldn’t afford the rent shortfall.

LHA rates were increased.

The benefit cap was not.

We are extremely hopeful that the Governments Child Poverty Strategy, due to be published in the spring, will address the two-child benefit cap. ‘The Times’ reported that the taskforce working on the strategy “would consider ending the two-child limit”.

The two-child limit and the benefit cap combined, are both preventing families who are experiencing homelessness finding a safe, secure, and affordable place to live, and more worryingly, the two benefit caps risk of making more families homeless.

We need a joined-up holistic economic policy that includes benefits and housing connecting the Treasury, DWP, MHCLG, all departments involved in the lives of people who need us the most.

London boroughs collectively spend £90m a month on TA, the effect of dissonate policies. The benefit cap traps some families in TA. It’s like squeezing a balloon moving the air around to achieve savings in one area, increasing spending in another… There is only one pot of money but competing departmental targets have resulted in policy that keeps squeezing the balloon in apparently random ways.

There are long term unintended economic consequences – If a child spends time living in insecure TA, their education outcomes are worse than a similar child who lives in secure housing, health outcomes are worse, employment outcomes are worse, their life-long economic outcome could be worse, and that costs the economy. This isn’t just about increased benefit reliance but about what that person can’t add to society – lost income tax, increasing reliance on the NHS, lost tax on savings, with a reduced disposable income there’s lost VAT… However, people aren’t economic entities, they are people and a child who spends time living in insecure TA may not achieve their full potential, their dreams, their whole life could be affected by their childhood of not knowing when they would have to move… again.

That’s the biggest loss.

As a socially responsible, not-for-profit housing organisation we are calling on the Government to have a joined-up, cross departmental approach to not just benefits, but the whole of the economy and, as a start, we would welcome the removal of the two-child cap.

Sue Edmonds, CEO Capital Letters

Property investment website Property Showplace features Capital Letters CEO Sue Edmonds in a frank Q&A about the work of Capital Letters and how we are making London better for Londoners, landlords, and investors.

Read the interview here




Because of Capital Letters’ unique pan London scope and experience we have seen the issues facing both our member London boroughs, and the families that we help out of homelessness and Temporary Accommodation (TA), at first hand.

We have been campaigning on behalf of our members and the tenants that we support to try and change the system since 2019.

The National Audit Office (NAO) report into the last Governments Homelessness approach has simply told us what we already know.

We know that “periodically capping and freezing the Local Housing Allowance (LHA)” affects council budgets and the move on rate from TA.

We know that “a lack of housing for social rent (that is, at a cost well below typical market prices) is a driver of homelessness, since households are instead pushed into the private rented sector which is typically more expensive and provides a less secure tenancy. The ending of a private rented sector assured shorthold tenancy is one of the biggest drivers of homelessness, accounting for around 23% of households owed a prevention or relief duty in Quarter 3, 2023-24.”

We know that “[a] lack of housing for social rent limits the routes out of homelessness for households who find themselves in temporary accommodation, as local authorities often cannot find them private rented sector properties in the local area that are affordable.”

And our response is….

We have to make it better.

We could give a long response about seeing just 0.8% of homes in London being even advertised at LHA rates let alone being let at that rate – with 17 people bidding for each property there’s little to no chance of that… We could share the experiences of our member boroughs, who, because of the rising, unaffordable rents are seeing more and more new homeless families in addition to those who are already trapped in Temporary Accommodation (TA). They are now using, on average 61% of their total housing budgets on TA; collectively London boroughs are spending a whopping £90m a month on TA. It’s unsustainable.

First and foremost, there’s not enough homes of any tenure, but the most acute problem is the lack of social rent, affordable rent, or LHA rate rent. The poorest in society are feeling the effects of limited investment in too many aspects of their lives, from the reduction in SureStart centres to housing.

Capital Letters should not need to exist.

In a perfect world, where everyone has access to the housing they need, and can afford, we wouldn’t exist. But the issues facing housing in the UK and especially London are going to take generations to fix, and we will be here trying to change the model, trying to make housing in London affordable for those who need it with our unique partnerships and investments helping Londoners find safe, secure, and affordable homes.

Because a home changes everything.



Capital Letters is a purpose driven, not for profit, private landlord working to end homelessness in London. We source and manage affordable, secure and safe homes for families experiencing homelessness – because a home can change everything. 

We are part of the solution – and you can be too. 

Find out about our Income Collection Officer role by clicking here.




Last year there were 11,880 no-fault evictions in London, an increase of 52% year-on-year.

Based on average occupancy, 27,000 people have been made homeless or put at risk of homelessness in the last year.

That’s enough people to fill half of the Emirates Stadium, or all of The Oval.

There are currently more than 83,000 children living in Temporary Accommodation (TA) in London, and every year, as no-fault evictions rise, that number rises.

All parties must commit to banning “Section 21” no-fault evictions.

No-fault evictions are the biggest cause of homelessness and cost untold amounts in expensive and often inappropriate TA, extra health and education support, extra benefits paid as people struggle to keep jobs, not to mention the reduction in taxes, possibly over a potential lifetime, as employment outcomes worsen for the children stuck in inappropriate and insecure housing.

This isn’t just a “now” problem, for some it becomes a “forever” problem.

Families need a secure foundation to build their best lives, and “Section 21” no-fault evictions take that away.