The Cost of Housing Asylum Seekers in the UK

The UK asylum accommodation system was designed around dispersal housing - ordinary homes in local authority areas across the country, managed by contractors on behalf of the Home Office. Hotels were never part of the original plan. They were introduced as emergency "contingency" accommodation in 2020 when the COVID-19 pandemic made shared dispersal housing unsafe. They were meant to be temporary. Five years later, 16,021 people are still in hotels (30 Jun 2026), down from a peak of 56,018 in September 2023.

The cost difference between the two approaches is extreme. Hotels cost £170 per person per night on average; dispersal housing costs £27. That is a six-fold difference. For the 16,021 people in hotels at 30 June 2026, that is a daily bill of about £2.72 million, or roughly £994 million a year if the population held at that level. The same people in dispersal housing would cost around £158 million a year. Actual hotel spend in 2024/25 was £2.1 billion, when far more people were in hotels than are now.

The most striking comparison is with deportation. An enforced removal costs an average of £48,800 (Home Office, March 2026). Housing one person in a hotel for a single year costs approximately £62,050 - more expensive than removing them. This does not mean removal is always the appropriate outcome (many asylum seekers have valid claims) but it does illustrate the scale of the financial cost of delayed decisions. Every month an asylum case goes unresolved in a hotel adds approximately £5,170 to the total cost.

The three contractors holding the Asylum Accommodation and Support Contracts (AASC) - Clearsprings Ready Homes (South of England and Wales), Serco (North and Midlands), and Mears Group (Scotland and Northern Ireland) - were awarded their contracts in 2019. The original 10-year contract was valued at £4.5 billion. The Home Office now expects it to cost £15.3 billion over the same period - a 3.4-fold overrun of £10.8 billion above the original estimate. The National Audit Office described the cost escalation as driven primarily by the switch to hotel accommodation and the higher-than-expected number of asylum seekers requiring support.

The North West of England hosts the largest share of supported asylum seekers (20%), partly because Serco has significant dispersal housing stock in Manchester, Liverpool and surrounding areas. London's share has fallen as the Home Office has pushed for more regional dispersal. However, local authorities have resisted accepting additional dispersal allocations, citing pressure on school places, social services, and housing waiting lists - creating a bottleneck that sustains hotel dependence.

Beyond accommodation costs, local authorities bear additional expenses that are only partly reimbursed by central government: children's safeguarding, special educational needs support, ESOL (English for Speakers of Other Languages) provision, and social care assessments. Schools in high-dispersal areas receive a per-pupil supplement of £1,025 for English as an Additional Language (EAL) pupils but report this falls short of actual costs. The full local authority cost of asylum accommodation has not been comprehensively published.