Lambeth £35m Homelessness Overspend: Out-of-Borough Housing Crisis 2026

Key Points

• Lambeth Council overspent its homelessness budget by £35 million in the last financial year, according to new documents obtained by local media.
• The council is increasingly sourcing temporary housing outside the borough due to high local costs and limited availability.
• Temporary accommodation costs have surged, with some households placed in hotels and bed-and-breakfasts at premium rates.
• Council leaders attribute the crisis to a national housing emergency, exacerbated by rising demand from private renters facing Section 21 evictions and benefit caps.
• Plans include expanding out-of-borough placements, negotiating bulk deals with private providers, and lobbying central government for more funding.
• Opposition councillors criticise the overspend as evidence of mismanagement, calling for an urgent review of procurement processes.
• The council’s homelessness service supported over 3,000 households last year, with more than 2,000 in temporary accommodation.
• Average nightly costs for temporary lets reached £150 per unit, far exceeding budgeted figures.
• New data reveals 40% of temporary housing stock is now located outside Lambeth, primarily in outer London boroughs and beyond.
• Council documents highlight risks of out-of-borough placements, including disruption to children’s schooling and access to services.

Lambeth (South London News) March 11, 2026 – Lambeth Council has overspent its homelessness budget by £35 million over the past year, with fresh documents revealing the authority’s growing reliance on temporary housing outside the borough amid soaring costs and acute shortages. The crisis has prompted calls for urgent reform from both Labour-led administration and opposition groups, as the number of homeless households in temporary accommodation hit record levels. This situation underscores broader pressures on London’s housing market, where local authorities grapple with national policy constraints and rising evictions.

What Caused Lambeth Council’s £35m Homelessness Overspend?

The overspend stems primarily from escalating costs of temporary accommodation, as detailed in internal council papers reviewed by multiple outlets. As reported by Lee Baker of Brixton Buzz, the council’s homelessness budget for 2025/26 was exceeded by £35 million, with nightly rates for hotels and private lets averaging £150 per household—more than double initial projections. Baker notes that demand spiked due to a 20% rise in homelessness presentations, driven by the legacy of no-fault evictions under Section 21 and the two-child benefit cap.​

Cllr Clara Jiggins, Lambeth Council’s Cabinet Member for Homelessness, acknowledged the financial strain in a statement to Brixton Buzz, saying,

“We are in the grip of a national housing emergency, with Lambeth bearing disproportionate pressure from private rental market failures.”

She emphasised that the council housed over 3,000 households last year, including 2,200 in temporary setups. Internal documents, as cited by Baker, show that procurement challenges led to emergency contracts with private providers, inflating costs without competitive tendering.​

Opposition voices have been vocal. Cllr Jonathan Bartley, Green Party leader on the council, told Brixton Buzz,

“This £35 million black hole is unacceptable—it’s taxpayers’ money squandered on sticking-plaster solutions while families suffer.”

He demanded a full audit of spending.​

Why Is Lambeth Sourcing Temporary Housing Outside the Borough?

Faced with local supply constraints, Lambeth is turning to out-of-borough options to meet statutory duties. According to the Brixton Buzz report by Lee Baker, 40% of the council’s temporary housing stock is now placed in neighbouring boroughs like Croydon, Sutton, and even further afield in Essex and Surrey. Baker quotes council officers warning of “escalating reliance on distant providers” due to Lambeth’s inner-city property prices, where a single B&B room can cost £200 nightly.​

This shift aligns with strategies outlined in Lambeth’s Homelessness Prevention Strategy update. Cllr Jiggins explained to Brixton Buzz,

“Out-of-borough placements are a necessity, not a preference; we prioritise family stability but must act within budget realities.”

However, risks are flagged: children face disrupted schooling, and vulnerable adults lose community ties.​

Similar trends appear in coverage by South London Press. Reporter Aisha Patel of South London Press detailed how Lambeth negotiated bulk deals with firms like Mears Group and Riverside, securing 500 units outside the borough at £120 per night—still 30% above budget. Patel attributes this to a 15% borough-wide hotel room shortage, worsened by post-pandemic recovery.​

How Has Demand for Homelessness Services Surged in Lambeth?

Rising evictions and welfare cuts have fuelled a 25% increase in homelessness cases. Brixton Buzz’s Lee Baker reports that 1,200 households presented as homeless in Q4 2025 alone, many fleeing no-fault evictions. The council’s data shows private renters, comprising 65% of cases, are hit hardest, with domestic abuse and overcrowding also key drivers.​

As per Southwark News journalist Tom Franklin, Lambeth’s figures mirror regional patterns: “Over 5,000 people, including 2,000 children, are in temp accommodation across South London boroughs.” Franklin quotes Lambeth’s Director of Housing, Sarah Raza, stating,

“Benefit caps leave families destitute; we’re seeing unprecedented single parents seeking aid.”​

MyLondon’s coverage by Josh White adds context, noting Lambeth prevented 800 evictions via interventions but still faced 700 statutory duties to house. White cites council minutes where officers described “systemic pressures from rising rents—average Lambeth flat now £1,800 monthly.”​

What Are the Risks of Out-of-Borough Temporary Housing Placements?

Disruption to lives is a major concern. Lee Baker of Brixton Buzz highlights council documents listing “school moves for 300 children” and “health service access barriers” from distant placements. Baker reports one family travelled 90 minutes daily for school, prompting Ofsted scrutiny.​

Cllr Bartley warned Brixton Buzz,

“Scattering families erodes community support networks; this is not sustainable housing policy.”

South London Press’s Aisha Patel echoes this, quoting a parent:

“My kids miss friends and GP appointments—it’s chaos.”

Lambeth’s risk register, per Brixton Buzz, flags legal challenges under the Children Act, with potential £10,000 fines per unsuitable placement.​

What Measures Is Lambeth Council Taking to Tackle the Crisis?

The council is pursuing multi-pronged reforms. Cllr Jiggins outlined to Brixton Buzz plans for 200 modular units on council land and £10 million in prevention funding. Bulk procurement deals aim to cut costs by 15%, targeting £100 nightly rates.​

Lobbying efforts include a joint South London mayoral bid for £200 million emergency funds. MyLondon’s Josh White reports Cllr Mahamed of Lambeth stating,

“We’re pushing Sadiq Khan for devolved powers on housing investment.”​

Opposition proposals feature. Cllr Bartley told South London Press,

“Freeze out-of-borough use; invest in local builds now.”​

Who Is Holding Lambeth Council Accountable for the Overspend?

Scrutiny committee hearings are underway. Brixton Buzz’s Baker notes a 18 March full council debate, with Lib Dems tabling a no-confidence motion on housing lead. Residents’ groups like Lambeth Housing Activists demand transparency, per their statement covered by Southwark News: “Publish all contracts; no more secrecy.”​​

The LGA has issued guidance, as cited by Patel in South London Press, urging “robust auditing to prevent recurrence.”​

What Does This Mean for Lambeth Taxpayers and Housing Policy?

The overspend equals 5% of council tax revenue, sparking levy hike fears. Josh White of MyLondon warns,

“Without bailouts, 2026/27 budgets face slashes in non-statutory services.”​

Nationally, it fuels debate on council funding. Cllr Jiggins told Brixton Buzz, “Central government must lift caps; local taxes can’t fix systemic failure.”​

Broader South London Context

Lambeth’s woes reflect regional crisis: Southwark £20m overspend, Wandsworth outsourcing 60% placements. Tom Franklin of Southwark News reports “collective South London summit” planned for April.​