Nearly twice as many asylum seekers are now being housed in taxpayer-funded rented homes than in hotels, fuelling a national debate about housing priorities. For landlords, the rise of government-backed “dispersal accommodation” schemes presents both opportunities and risks, with experts warning against signing contracts without robust legal advice.
Asylum seekers moved into private rentals
By December, 66,000 asylum seekers were placed in dispersed accommodation — mostly private rented homes — compared with 38,000 in hotels, according to Home Office data cited by the Daily Mail. The government says the policy saves money, with rental accommodation costing around £14 per person per night, compared with £145 in hotels.
Yet the optics have sparked anger in some communities. Reports this week highlighted four £300,000 new-build townhouses in Suffolk, fitted with underfloor heating and EV chargers, being allocated to asylum seekers despite nearly 800 local people waiting for social housing. Elon Musk even weighed in online, tweeting: “This must stop now.”
Such stories play into wider frustrations about housing supply, where both private renters and landlords feel squeezed by policy pressures and high costs. The difference is landlords are expected to absorb more tax, regulation, and compliance — while government rental schemes draw directly on the public purse.
Landlords urged to check contract risks
For landlords approached by providers like Serco, which holds a Home Office contract initially worth £2.1 billion in 2019 but now projected to reach £5.5 billion, guaranteed rent payments may seem attractive.
Nathan Emerson, chief executive of Propertymark, cautioned: “The upturn of private companies offering non-traditional options can seem appealing as it can provide a fixed, reliable, and hassle-free income stream by eliminating concerns about void periods, late rent payments, and tenant management, but caution is essential. Some contracts may be heavily skewed in favour of providers; therefore, it is crucial for landlords to thoroughly understand their legal rights and obligations before signing any agreements and to seek professional advice.”
For many small landlords already dealing with mortgage stress, EPC upgrades, and looming Renters’ Rights Bill reforms, entering into long-term accommodation contracts without clarity could prove costly.
Billions committed to asylum housing
The National Audit Office estimates asylum accommodation costs will total £15.3 billion between 2019 and 2029. Ministers say reducing hotel use cut costs by £1 billion last year, while Labour has pledged to end asylum hotel use entirely by 2029.
Yet for landlords, the bigger question is where these properties come from and what that means for private renters. Local letting agent Sarah Jones in Suffolk commented: “It’s hard to explain to young families why they’re on a waiting list when they see brand-new houses being used for asylum accommodation. It creates resentment — and landlords end up stuck in the middle of policy and politics.”
With dispersal housing costs rising and political promises stacking up, landlords must weigh whether government-backed contracts genuinely support their business models or simply shift risk from the state to the individual investor.
Editor’s view
The asylum housing row is a stark reminder of how government interventions distort the private rented sector. For landlords, the lure of guaranteed income is tempting, but contracts can carry hidden risks and reputational baggage. As housing policy becomes ever more politicised, the real question is whether landlords should be left carrying the responsibility for government obligations — or whether Westminster should face up to its own housing supply failures.
