(UNITED KINGDOM) The Home Office’s plan to offer payments to asylum seekers to leave hotels is facing steep headwinds in about 200 areas across the country, where over 32,000 people were housed as of June 2025. Those hotels, which the government relied on heavily during a surge in arrivals and a processing backlog, cost an average of £145 per night or £1,015 per week per person, a level that critics say makes the payment scheme both costly and hard to deliver at scale.
According to analysis by VisaVerge.com, the idea of cash incentives might ease a few bottlenecks, but the scheme collides with the scale of need and the structure of existing contracts in a way that will likely blunt any short-term gains.
Costs, rates and scale
- Average hotel rates reportedly fell from £162 per night in April 2024 to £119 in March 2025, but that change came alongside a reduction in hotels from 273 to 202 and more room sharing.
- Even with that shift, hotel use remains over six times more expensive than other asylum housing options — £170 vs. £27 per person per day in 2024/25.
- The headline figure — £1,015 per week per person in some areas — highlights the budget pressure hotels create.
These numbers show that while some cost reductions are possible, they are masked by steady arrivals and the backlog still moving through the system. The sheer scale — over 32,000 people in roughly 200 hotels — makes the churn required to stop hotel use extremely large.
Housing supply and local pressures
Local realities limit the plan’s feasibility:
- Local housing supply is tight in many towns and cities.
- Landlords often hesitate to accept placements.
- Private rentals that might be available compete with local families looking for homes.
Even if a payment persuades someone to leave a hotel, there must be a suitable place to go — and that remains the hardest piece to secure. Communities hosting the hotels report mixed impacts:
- Some councils face strained budgets.
- Local charities say they struggle to meet growing needs.
- Most agree hotels are a poor long-term fit, but small-scale housing and dedicated sites are scarce.
Contract design and incentives
Contract structure has emerged as a deeper structural problem. MPs have criticized what they describe as chaotic contract management, with incentives that can reward providers for keeping people in higher-cost placements longer.
- If contracts financially reward hotel occupancy, a payment scheme encouraging exits will work against those incentives.
- Until contract incentives change, the policy risks moving money around without significantly moving people.
Well-being and practical barriers
Well-being concerns add another layer of complexity:
- Room sharing has increased to cut costs, but support groups warn that crowded conditions can harm mental health and complicate casework.
- For people who have experienced trauma, shared rooms and frequent relocations can make them less willing to accept further moves.
- When the next step is unclear, a one-off payment may not be enough to overcome doubts about relocation.
“If people accept payments now but then face long waits for suitable placements, churn could increase rather than shrink.”
Moves on paper don’t always translate into settled lives — and once money is paid, it’s gone while hotel costs continue if beds fill again.
Operational attempts and limitations
Officials have been closing some hotels and attempting to limit daily rates. These actions produced lower average nightly costs but also:
- Squeezed more people into fewer sites.
- Made individual hotels busier and local services more stretched.
- Increased complexity for planning transitions out of those properties.
The system still needs a pipeline of alternative accommodation ready to receive people — and that pipeline remains narrow.
Political context and incentives for quick fixes
The payment plan arrives amid political pressure to cut costs and show visible change. That urgency can encourage quick fixes even when the system needs a steady build-out of affordable places.
- Local advocates describe families who don’t want to stay in hotels but won’t accept moves that break up community ties, separate relatives, or push them far from services.
- A one-off payment, they say, won’t steady that ground.
Some in Parliament have urged tighter contract terms and stronger oversight, arguing public funds should not reward expensive placements when cheaper, more stable options exist. Yet many officials acknowledge the system can’t swap tools without supplies and time.
Likely outcomes and key takeaways
- The payment scheme may ease a few local bottlenecks but is unlikely to deliver large-scale reductions while arrivals and the backlog remain high.
- Contract incentives, limited housing stock, and well-being concerns all constrain how many people can realistically move out of hotels.
- The plan may win headlines but is likely to produce limited capacity change in the short term.
For official policy detail on asylum support and accommodation, the government sets out its framework on GOV.UK.
Ultimately, those working closest to the issue judge that the Home Office can reduce nightly rates at the margins, close some hotels, and offer payments to prompt exits — but without changing contract incentives and increasing housing supply, hotels will remain a fallback and the payments will move fewer people than their designers hope.
This Article in a Nutshell
The Home Office plan to pay asylum seekers to leave hotels is constrained by scale, costs and contract design. About 200 sites held over 32,000 people in June 2025, with average hotel costs around £145 per night (£1,015 per week). Although nightly rates fell modestly, reductions came with fewer hotels and increased room sharing. Contract incentives often reward occupancy, and limited local housing supply plus mental-health and practical barriers mean one-off payments will likely produce only modest, local relief without broader contract reform and increased accommodation supply.
