Could the private rented sector be the key to tackling homelessness?

The negative narrative around private rents misses a vital, growing part of the sector, the so called ‘mediated market’, writes Louise Winterburn, deputy chief executive of World Habitat for the Reset Homelessness campaign.

The UK’s housing crisis is deepening, placing increasing pressure on local authorities as they face soaring costs and limited options. Between April 2023 and March 2024, councils in England spent a record £2.29bn on temporary accommodation, a 29% rise on the previous year. Meanwhile, new analysis by the National Housing Federation, Crisis and Shelter found that in 32 local authority areas, the wait for a home with three or more bedrooms now exceeds 18 years.

While recent funding for affordable and community-led housing is welcomed, a critical component of the housing system remains conspicuously absent from national policy debates: the private rented sector (PRS). Yet for tens of thousands of people who cannot access social housing, and who face years in temporary accommodation, homes rented from private landlords are not just a stopgap – they’re the only option.

Accounting for 19% of all households in England, the PRS is the second-largest tenure type after owner-occupation. It is also frequently portrayed as unstable, unaffordable and poorly regulated – concerns that are often well-founded. However, this narrative misses a vital, growing part of the sector, which is doing things differently and helping to minimise the chronic gap in social housing – the so called ‘mediated market’. 

These not-for-profit providers operate at affordable Local Housing Allowance (LHA) rent levels and access a range of support services, from tenancy sustainment to financial and legal advice. They provide affordable, good-quality private rented homes with targeted support for people in acute housing need. 

In the UK, local authorities, social enterprises, charities and ethical landlords are already proving what’s possible. 

For example, Homes for Good in Scotland is a specialist letting agency for low-income renters, which renovates properties, partnering with private landlords to offer affordable homes alongside tenant support.  

Canopy and Giroscope in England are organisations that refurbish empty properties into decent, affordable homes through community-led renovation. They rent below market levels to people facing homelessness and housing insecurity.  

With targeted investment, partnership working and supportive policies, these examples show it’s possible to unlock private rented homes that meet urgent housing needs.

The case for recognising and supporting this segment of the PRS is compelling. It provides immediate and scalable options for people who would otherwise be left waiting years for social housing or trapped in expensive, unsuitable temporary accommodation.

However, there is growing concern that this vital housing is under threat. Local authorities and not-for-profit organisations are reporting serious issues with the financial viability of using the PRS to house people on benefits. This is due to rising costs, regulatory uncertainty, and shortfalls in LHA.

The result: fewer affordable homes at the precise moment they are most needed and increased use of more expensive temporary accommodation. Just recently, Capital Letters – which has helped over 6,500 households move into secure rental homes in London – announced its closure at the end of 2025 precisely due to these challenges.

World Habitat’s recent international research on the PRS highlights both the sector’s potential and its current fragility in the UK, and uncovered these key insights:

• PRS rents remain significantly higher than social housing, particularly in urban centres.
• Housing benefit rates often fall far short of actual rents, leaving tenants with unaffordable shortfalls, thereby limiting their access to private rented homes.
• Financial and regulatory pressures are shrinking the pool of affordable private rentals.
• Councils, charities and private tenants are increasingly competing for the same limited affordable supply.
• Many renters in the PRS – especially those housed by necessity, not choice – require ongoing support, which remains patchy or unavailable.
• Substandard conditions and poor energy efficiency persist in the lower end of the market, with many landlords lacking the capital to upgrade their properties.
• Mediated market organisations offer a scalable and place-based approach and can respond to local housing needs and opportunities. However, this promising trend remains significantly under-resourced.

For too long, the PRS has been viewed solely through the lens of its risks. But as World Habitat’s current research and the experiences of housing professionals across the UK show, it is also rich in potential and waiting to be unlocked. With the right policies, funding and support, these models can deliver affordable, safe and secure homes at scale — and do so now, while additional funding for social and community-led housing comes online.

Louise Winterburn, deputy chief executive, World Habitat

This article can be read on Inside Housing here.