From Hotels to HMOs: How the Home Office Quietly Shifted Asylum Housing into Britain’s Streets
Ministers promise to end asylum hotels by 2029 and save public money. On the ground, a quieter shift has already begun — out of high-profile hotels and into ordinary streets. This long read explains what has changed, who decided it, what it costs, and why many councils say they are being blindsided.
Hotels out of sight, houses in plain view
For years, the most visible symbol of Britain’s strained asylum system has been the hotel: coaches arriving at night, security on the doors, and local protests whenever a new site is announced. Government ministers now say that era is ending. The headline pledge is to phase out asylum hotels by 2029, with the promise of major savings to the taxpayer and fewer flashpoints for communities.
But ending hotels has not ended the need for roofs. Instead, accommodation has been dispersed into the private rented sector through a network of contracts with three major providers. Family houses are being converted to Houses in Multiple Occupation (HMOs), small blocks of flats are being leased, and rooms are being filled under arrangements that often become visible to councils and neighbours only after the fact. The centre of gravity has shifted from the hotel forecourt to your street.
Portsmouth: a council left in the dark
The change is perhaps most stark in Portsmouth. Despite telling the Home Office that the city could not take further placements, officials later discovered that dozens of privately owned HMOs across the city were already hosting hundreds of asylum seekers. There had been no advance consultation, no joint planning, and little opportunity to prepare services. The revelation prompted awkward questions: who knew what, when — and how many other towns and cities have experienced the same thing without a public paper trail?
For Portsmouth’s leaders, the issue is not simply capacity but legitimacy. If councils cannot even get an accurate picture of placements on their patch, their ability to plan schooling, primary care and neighbourhood support is undermined from the start.
Horwich, Bolton: when a family home becomes a hostel
In Horwich, near Bolton, residents watched a familiar family home transform almost overnight. Internal locks and fire doors appeared, rooms were reconfigured, and six men seeking asylum moved in under the government’s dispersal programme. The move itself was lawful. The controversy lay in the speed, the scale and the lack of local say. Bolton’s stock of HMOs has surged in recent years, changing the character of streets and concentrating demand on services that were never designed for rapid population churn.
Bolton Council responded by imposing an Article 4 Direction, a rarely used planning control that requires explicit permission for new HMOs. It was, in effect, a bid to slow an unplanned conversion wave and to re-assert democratic control over how housing is used at street level.
County Durham and beyond: a growing pushback
Resistance is not confined to one borough. In County Durham, controversy around property acquisitions by one of the Home Office’s contractors triggered a pause on new procurement. In Waterlooville, plans to place asylum seekers in newly built flats were dropped after residents and councillors argued the homes had been earmarked for locals. Across parts of Kent, clusters of large HMOs have provoked warnings about over-concentration and suitability.
These flashpoints share a common theme: decisions made centrally and executed by contractors can land locally without notice, leaving councils to manage the politics and the practicalities after the fact.
Follow the money: savings claimed, costs displaced
The financial case for moving away from hotels is real. Hotels are the most expensive option on a per-night basis and a political magnet for protest. Rates have fallen from their peak as the government pushed providers harder, but the hotel bill still ran to billions. By comparison, leasing homes or using HMOs should be cheaper per person per night, which is why ministers link the 2029 pledge to headline annual savings.
Yet the broader balance sheet is more complicated. Major, highly publicised alternatives — barges, decommissioned air bases and other large sites — have racked up sunk costs even when schemes were delayed, scaled back or abandoned. At the same time, the main asylum accommodation contracts have grown in value as they absorb more of the system. The result is a programme that is less visible than hotels but still very expensive, with the bill reshaped rather than reduced.
There is also the matter of where costs now land. Moving people into ordinary housing shifts pressure onto local services: homelessness teams dealing with move-on bottlenecks for newly recognised refugees, GPs and schools absorbing demand spikes, and environmental health officers fielding neighbourhood complaints. Those downstream pressures rarely feature in national savings claims, but they are paid by the same taxpayer via council budgets.
The accountability gap: weakened licensing, slower enforcement
In England, asylum HMOs sit in a grey zone. Regulatory changes have carved them out of parts of the normal HMO licensing regime, removing fee income and narrowing the direct levers available to councils. Instead of imposing and enforcing conditions themselves, local authorities are often told to route concerns through the Home Office or its providers. That can slow action on overcrowding, fire safety and anti-social behaviour, and it blurs lines of responsibility when something goes wrong.
Court challenges in recent years have highlighted just how contested this space has become. Councils are accountable to their residents for standards and cohesion, but their ability to control how properties are used has been curtailed at precisely the moment the system relies on more HMOs, not fewer.
From hotels to houses: the new operating model
What is taking shape is a dispersed estate managed largely by three prime contractors. Landlords across designated regions are invited to lease properties on guaranteed rents with full management provided. On paper, it is neat: guaranteed occupancy for owners, predictable unit costs for government, and fewer headline-grabbing hotels. In practice, the opacity of commercial contracts makes it difficult to track unit economics, address standards quickly, or plan for service impacts.
For residents, the most tangible change is quiet but profound: the house next door may cease to be a family home and become an HMO with minimal notice. For councils, it means new responsibilities without matching powers. For taxpayers, it means paying for a system that has been re-packaged rather than fundamentally re-designed.
Public service pressure: the hidden ledger
The asylum system’s “back end” is where many costs are now felt. When claims are decided and people receive refugee status, they are expected to move on quickly. Without sufficient affordable housing, a proportion become homeless and present to councils the same week, triggering emergency accommodation duties and support costs. Schools and GP practices in HMO-dense neighbourhoods can see demand spike without funding following in time. None of this is as visible as coaches outside a hotel, but it is every bit as real — and it shows up on local ledgers.
What this means for communities and the national debate
Ending hotels may cool one political fire, but it does not put the overall blaze out. The current approach lowers the visibility of asylum accommodation while raising its proximity to everyday life. That proximity can be managed — many towns already do it well — but only if councils have clear data, adequate funding, and real control over conversions and standards. Right now, too much of that control sits elsewhere.
For national policymakers, the question is whether the hotel pledge is a waypoint or an end point. If the goal is a humane, affordable system that communities can live with, then transparency, local partnership and realistic funding need to be designed in, not patched on after the fact.
Method and next steps
This article draws on a combination of local reporting, council statements, watchdog findings and contractor literature to map the shift from hotels to HMOs and leased homes. The true scale is hard to audit because exemptions and commercial confidentiality limit the data available to councils and the public. Over the coming weeks we will explore targeted Freedom of Information requests to build a clearer picture of placements, costs and enforcement outcomes area by area.
If you have direct experience of how these changes are playing out on your street — as a neighbour, landlord, council officer or new arrival — you can contact Fidelis News in confidence. First-hand accounts and local documents help us test official claims against everyday reality.
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