How the UK Houses Asylum Seekers with Serco and Private Landlords

(UNITED KINGDOM) — The British government has tied a drive to end the use of asylum hotels by 2029 to a broader overhaul that cuts support for some applicants, extends the wait for settlement to 20 years and keeps contractors such as Serco and private landlords at the center of the housing system.

More than 36,000 asylum seekers were living in hotels in September 2025, a 13 percent increase since June 2025, while approximately 80,000 unresolved asylum cases continued to stretch accommodation capacity. The hotel bill exceeds £5 million daily, with hotels costing approximately £145 per person each night compared with around £14 per person nightly for private rented accommodation.

March 2026 Reforms

The Home Office announced the latest reforms on March 2, 2026. They include 30-month refugee protection reviews, a tighter test for access to accommodation and financial support, and a system that may require some applicants with assets to contribute towards accommodation costs.

Those policy changes land as the government relies on the Asylum Accommodation and Support Services contracts that began in January 2019 and run until August 2029. Clearsprings Ready Homes, Mears Group and Serco hold the main contracts, while Migrant Help operates a separate support contract.

Break clauses became available from March 2026, opening the way for renegotiation or early termination as ministers try to recast the accommodation system. Across the 2019-2029 period, the total estimated value of the contracts is £15.3 billion.

Serco and the Private Landlord Model

Serco remains one of the most visible operators in that structure. Awarded a 10-year contract worth £1.9 billion by the Home Office in 2019, it operates across the Northwest, Midlands, and East of England by leasing properties from private landlords, taking on the role of tenant and then housing asylum seekers while their claims are processed.

For landlords, the offer is straightforward. Serco continues to recruit property owners with five-year fixed leases, no void periods, guaranteed monthly rent payments backed by government contracts, full maintenance and repairs at no cost to the landlord, council tax and utility bills covered during occupation, and full property management.

That model helps explain why private landlords remain central to the government’s effort to move people out of hotels. The University of Oxford’s Migration Observatory estimates that moving away from hotels could save taxpayers at least £1 billion annually by 2028-29.

The government’s deadline is 2029. Reaching it will require shifting more than 36,000 people from hotels into other forms of accommodation, mainly private rented homes, HMOs and large-scale sites.

Refugee Protection and Settlement

Refugee protection itself is also changing. Under the new model, protection is granted on a time-limited basis and then reviewed every 30 months rather than being treated as long-term protection from the outset.

The policy applies “from 2 March 2026” to all adults claiming asylum. Protection will be reassessed at each review on the basis of whether return to the country of origin remains unsafe at that point.

Ministers have also said refugees will now wait 20 years before they can apply for permanent settlement in the UK. Separate changes to permanent residence rules are planned to begin in April 2026 through an “earned settlement” model with longer qualification periods.

Taken together, those moves reshape the path from asylum claim to long-term residence. A person granted protection can now face repeated 30-month reviews and a far longer route to settlement unless they move into another visa category.

Support and Eligibility

Support during the claim is changing too. The reforms remove the legal duty to provide accommodation and financial support to certain asylum seekers, including individuals deemed able to support themselves and those with the right to work.

Applicants must now show that they would face destitution without assistance. The government also plans a contributions mechanism that could require those with assets to help pay for asylum accommodation.

For asylum seekers, the practical effect is uncertainty on several fronts at once. Housing support is less automatic, protection is less stable, and settlement moves further away.

How the Accommodation System Is Divided

The accommodation system they enter remains heavily outsourced. Under the AASC regional breakdown, Clearsprings Ready Homes covers the South region at £7.0 billion, or 46% of total, and Wales at £0.3 billion, or 2%; Serco covers the Midlands and East of England at £263 million, or 16%, and the North West at £182 million, or 11%; and Mears Group covers the North East, Yorkshire and the Humber at £182 million, or 11%, and Scotland at £82 million, or 5%.

Across the seven regions, the contracts require initial accommodation for a total of 1,750 people. The amount of dispersed accommodation suppliers were required to provide was expected to grow to a final cap of 100,300 people as of December 2024.

Performance under those contracts has been uneven, but the Home Office has already leaned harder on the system. Greater use of room-sharing and a larger Home Office role in matching people to accommodation pushed occupancy from 75% to 80% between November 2023 and June 2024, avoiding £109 million being spent on hotels.

Planning Barriers and Housing Constraints

Even so, the move away from hotels faces housing shortages and planning barriers. Hotels used for asylum accommodation now sit in a “grey area,” caught between central government policy and locally enforced planning law.

That tension extends beyond hotels. Most property types can be used for asylum accommodation, including houses, flats, HMOs and converted buildings, but landlords face enhanced HMO licensing in many areas, stricter property standards, regular inspections, record-keeping duties and local authority notification requirements before properties are used.

Those are not standard lets. The arrangements are service agreements rather than ordinary rental contracts, which changes the legal status and can affect insurance and day-to-day obligations.

Landlords working with Serco must also settle the detail. They need service level agreements, clarity on maintenance responsibilities and response times, and clear inspection, reporting and communication procedures.

The pressure to find alternatives to hotels has made HMOs the default substitute alongside attempts to use Ministry of Defence sites. That shift creates a separate risk in the wider housing market because five-year fixed agreements with Home Office providers can encourage owners to convert family homes into HMOs.

Building new facilities will not quickly solve the problem. New sites can take 18 to 24 months to construct, leaving ministers to depend on dispersed housing, landlord recruitment and existing large-scale sites as they try to meet the 2029 target.

Some of the large-site strategy has already stumbled. The Home Office announced in September 2024 that it no longer planned to use the Lincolnshire site, and as of December 2024, the Bexhill site in East Sussex had never opened.

Housing supply figures underline the scale of the challenge. The UK needs to build 1.5 million homes nationally, yet only around 50,000 homes have been started in some regions annually. In London, the target is 88,000 homes per year, but only around 5,000 have been started.

Against that backdrop, private landlords remain one of the few immediately available routes to more capacity. For many owners, government-backed rent, no void periods and outsourced management offer a stable income with limited direct contact with occupants.

For local authorities and residents, the picture is more complicated. The push to disperse asylum seekers into rented homes or HMOs can collide with already tight housing markets and with local planning rules.

For applicants, the housing question now sits inside a much harder asylum framework. A person may need to prove destitution to qualify for support, live in contractor-managed accommodation while their claim is decided, then face recurring status reviews even after being granted protection.

Safe Routes, Returns and Political Reaction

The government says it also wants to recast legal routes. Under the March 2026 changes, the Home Secretary will set an annual cap based on community capacity, the government will prioritise global resettlement referrals from the United Nations High Commissioner for Refugees, and new safe routes will allow British citizens to sponsor refugees, similar to the ‘Homes for Ukraine’ scheme.

At the same time, ministers intend to explore return hubs in safe third countries for failed asylum seekers instead of returning them directly to their home countries. The Safety of Rwanda Act 2024 was repealed in early 2026, but broader return arrangements remain under consideration.

The combined effect is a system built around tighter control, lower costs and more conditional access to support. Ministers have presented the approach as a way to make the asylum system “sustainable for local communities and UK citizens.”

Rights groups have pushed back sharply. Campaign groups have described the reforms as “cruel” and “unjust,” arguing that temporary protection, longer settlement timelines and reduced support will make it harder for refugees to build stable lives.

The next three years will test whether the government can turn that policy into bricks, leases and beds. With break clauses now live, more than 36,000 people still in hotels, and Serco and other contractors still dependent on private landlords to expand supply, the race to end hotel use by 2029 has already become a measure of whether the asylum system can house people at all while the backlog remains at approximately 80,000 unresolved cases.