Published: Thursday 5 June 2025
Kensington and Chelsea Council's Leadership Team has agreed a pioneering scheme to use up to £100 million from its pension fund to purchase up to 250 homes for homeless families.
The initiative, the first of its kind in Britain, will provide vulnerable residents with stable, affordable and safe homes while significantly reducing the Council’s reliance on expensive and sometimes unsuitable options such as hotels, B&Bs and properties from private landlords.
Crucially, the Kensington and Chelsea scheme will operate at no cost to taxpayers as rental income generated by the Council is intended to cover both the payments to the pension fund contributions as well as ongoing management and maintenance costs. The Council’s payments to the pension fund will be at a discounted rate compared to if the money was borrowed commercially.
Cllr Elizabeth Campbell, Leader of Kensington and Chelsea Council, said:
“London is facing a growing homelessness emergency that is devastating lives and placing huge pressures on councils’ finances. It is going to take innovative, decisive action to tackle it effectively.
“This is a pioneering partnership to potentially unlock hundreds of good quality homes for vulnerable families at no new cost to our taxpayers. It will also reduce the amount we spend on unsuitable and unsustainable temporary accommodation and provide stability and a brighter future for those who need it most.”
How will the new scheme work?
Homes purchased under the new arrangement will be leased to the Council on a long-term basis, with the authority also taking responsibility for collecting rents and managing the properties.
The scheme will enable the Council to fulfil its legal obligations to homeless households using good quality homes. It will also contribute to the first priority of the Council’s draft Housing Strategy 2025-2030, which aims to provide a diverse supply of housing to help residents into settled homes.
What is the homelessness challenge facing London?
According to London Councils, spiralling temporary accommodation costs mean boroughs in the capital were forced to overspend on their homelessness budgets by at least £330m in 2024-25. This represents a 60 per cent increase on their original homelessness budget plans for the year.
How can I find out more?
The decision was made by the Council’s Leadership Team at a public meeting on Wednesday 4 June 2025. You can watch the meeting in full and read a full report on our website.