Merton Council has approved a £35.1 million plan to buy 125 homes this year as part of a strategy to address a spiralling temporary accommodation crisis. The programme aims to acquire 225 homes over four years, funded by the council's capital budget and a government grant.
Rising homelessness and housing pressures
The number of homeless households placed in expensive nightly-paid rooms has skyrocketed since the pandemic. Local rents have surged by over a third in the past five years, and the council's housing register now includes more than 10,000 applicants. By March 2026, 732 households in the borough were living in temporary accommodation, up from 199 in early 2020.
Kathryn Eames, Director of Regeneration and Planning, noted that “many residents of the borough are experiencing social and economic hardship because of a malfunctioning housing market.”
Council approves £35m investment
At a cabinet meeting on July 13, Merton’s Cabinet Member for Housing and Sustainable Development, Andrew Judge, acknowledged the scale of the problem, saying: “In the longer term, we are going to be facing immense housing pressures in this borough.” The cabinet approved a major capital investment of around £35.1 million, comprising £20.08 million from the council's own capital budget and £15.08 million as a grant from the Ministry of Housing, Communities and Local Government.
The combined investment will fund the purchase of 62 homes over four years. The council has already begun acquiring homes, with 13 street properties purchased and a further 10 in the conveyancing process. It is also close to completing the purchase of seven newly built four-bedroom homes and plans to convert five existing council-owned properties into residential use.
Slow progress on affordable housing
The decision comes amid slow progress in delivering affordable housing. No affordable homes were completed in the last financial year, and while 1,711 homes were started as several major schemes entered construction, only 170 were completed, none of which were affordable.
Innovative leasing and savings
Merton is also exploring decade-long leasing agreements with property-owning pension funds and institutional investors, an unusual approach for a local authority. The council hopes these partnerships will provide access to high-quality homes at below-market rents while offering investor partners long-term financial security.
Moving families out of costly hotel accommodation into council-owned or leased homes is expected to deliver significant savings. Council finance officers estimate the authority will save around £10,000 a year for each property it acquires. Once the ultimate target of securing 225 new homes is achieved, the council anticipates an annual budget saving of £2.25 million, which could also support the council's general fund, severely impacted by the unpredictable costs of private accommodation.
Challenges ahead
However, the council acknowledged the scale of the challenge ahead, with a difficult property market and a likely increase in homelessness putting more pressure on services.
