A government initiative to deliver 900 new homes for asylum seekers through local councils remains stalled, with key authorities awaiting clarity on funding and implementation. The pilot scheme, designed to shift away from costly private contractor-run migrant hotels, aims to integrate properties acquired or built by councils into the social housing sector.
The Government allocated £500 million toward this new asylum accommodation model, intended to reduce reliance on taxpayer-funded hotel placements that cost £2.1 billion between April 2024 and March 2025. Approximately 200 local authorities initially expressed interest in participating in the Asylum Dispersal Pilots, but only a smaller number have been selected to move forward. Despite this, councils report limited progress and few concrete decisions from the Home Office.
Powys County Council, one of the local authorities that indicated interest, stated there has been no advancement or decisions from the Home Office to date. Brighton & Hove City Council, led by Bella Sankey, described the pilot as an enthusiastic opportunity and urged the Home Office to begin rolling out the scheme promptly. Sankey highlighted the potential for councils to expand their housing stock through government investment.
Other councils have experienced varying levels of engagement. Newcastle City Council held talks with the Home Office and the Department for Levelling Up, Housing and Communities (MHCLG) but indicated discussions have since ceased. Hackney Council also had initial exploratory conversations but has not received recent updates. Medway Council and Peterborough expressed interest but were ultimately not selected for the scheme. Oxford City Council sought a pilot focused on support rather than housing; however, the Home Office has decided against pursuing this option.
The Chartered Institute for Housing (CIH), which helped develop the proposals, acknowledged in April that progress has been slower than expected. They noted that the £500 million earmarked for the pilot remains unspent despite substantial interest from various councils.
According to government statements, the allocated funding is intended to support councils in acquiring alternative accommodation for asylum seekers awaiting case determinations. Initially, these properties would be leased to the Home Office and could subsequently become permanent social housing. The Home Office emphasized that any new council housing will not be available to individuals residing in the country illegally.
Kate Wareing, chief executive of Soha Housing and a campaigner for the scheme, has praised the plan’s potential to reduce public spending and increase affordable housing stock. The Home Office reported that total spending on asylum seekers reached about £4 billion in the year ending March 2025, with hotels accounting for more than half of that amount.
A government spokesperson reiterated the commitment to closing all asylum hotels, stating that progress is underway to identify more suitable housing sites to relieve community pressures. However, the timeline for fully implementing the council-led housing pilot remains uncertain.