The government's strategy to eliminate the use of hotels for asylum seekers by 2029 means more private landlords will have to provide accommodation, it says.
The Daily Telegraph reports that Chancellor Rachel Reeves announced the initiative during the recent spending review and projected annual savings of £1 billion for taxpayers.
The move, however, is expected to intensify strain on the private rented market , where young renters already face fierce competition for homes.
Government insiders have confirmed to the newspaper that more landlords would need to take in asylum seekers - and local authorities are also expected to help.
One official explained: "Reducing the backlog is going to be a mix of ending the use of hotels as well as ramping up cheaper accommodation."
Immigrants need homes
The shadow home secretary, Chris Philp, told the newspaper: "No matter how much Rachel Reeves may claim [Labour] will get the backlog of asylum claims down – immigrants will still need a place to stay.
"With experts warning that the government will get nowhere near their target of delivering 1.5m new homes, the British people must come first when it comes to access to housing."
He added: "Accommodating illegal immigrants in flats takes up valuable space needed by our own young people."
Earlier this year, The Telegraph exposed an offer by Serco, a Home Office contractor, to attract PRS landlords with five-year contracts guaranteeing full rent paid.
This would be done 'on time every month with no arrears'.
The contractor's offer also includes maintenance, repairs, property management and will see the council tax and utilities being paid.
PRS is under pressure
Propertymark's chief executive, Nathan Emerson, told the newspaper that the private rented sector is already under pressure.
He said that seven people on average apply for every available rented home.
Mr Emerson added: "As with any reforms or proposed changes that affect housing, there must be comprehensive stakeholder engagement and continuous conversation to lay down concerns and provision for future demand."
The Local Government Association welcomed the government's plan but urged early council involvement, with a spokesman saying that councils needed to be 'fully engaged' in advance of any decisions.
End migrant hotel use
The government's plan to close migrant hotels will deliver on Prime Minister Sir Keir Starmer's pre-election pledge to end hotel use for asylum seekers.
However, a National Audit Office report in May revealed that asylum housing costs could reach £15.3 billion.
That's much higher than the contracts signed with three migrant housing providers by the Conservatives in 2019 for £4.5bn over 10 years.
Private rentals, costing as little as £14 per night compared to £145 for hotels, are seen as a cost-effective alternative.
At the end of March, 32,345 asylum seekers were housed in UK hotels, a 15% drop from 38,079 in December.
PRS opportunities and challenges
The managing director of Accommodation for Students, Simon Thompson, said: "The government's push to house asylum seekers in private rented homes presents both opportunities and challenges.
"The Serco contracts offer financial security with guaranteed rent and covered costs, potentially appealing to landlords navigating a competitive market.
"However, increased demand could further strain the rental sector, particularly in university towns where students already vie for limited properties."
He added: "Landlords will need to carefully weigh the lure of steady income against the risk of alienating student tenants, who are the lifeblood of many rental portfolios."
