Closing asylum hotels: What will the policy mean in practice?

Ali Ahmadi, Catherine Barnard and Fiona Costello look at the implications of the Labour governmen’s promise to close all asylum hotels.

The UK government has committed itself to closing all asylum hotels by the end of this Parliament. It aims to discontinue the use of contingency hotels and rely instead on other asylum accommodation such as Houses of Multiple Occupation (HMOs) and family houses, as well as investigating the further use of ‘large sites’ such as ‘modular buildings’  and former military bases like Wethersfield in Essex and Cameron Barracks in Inverness. This policy is intended to save taxpayer money and improve the suitability of accommodation. But what does this transition mean in practice given the housing shortage in England? And what are the implications for local authorities, support organisations, local communities, and asylum seekers themselves?

Under the Immigration and Asylum Act 1999, the Home Office is responsible for housing destitute asylum seekers. Between 2012 and 2019, this was delivered through six regional contracts known as COMPASS. In 2019, COMPASS was replaced with seven similar arrangements, the Asylum Accommodation and Support Contracts (AASCs). These contracts were awarded to three providers: Clearsprings Ready Homes, Mears Group, and Serco. Under these contracts, asylum seekers are dispersed on a ‘no-choice’ basis to areas where accommodation is cheap and available which has meant that dispersals have been concentrated in deprived (and thus low-cost) areas.

For instance, the Guardian’s analysis of Home Office data in 2016 showed that 57% of asylum seekers were housed in the poorest third of the country while the richest third housed only 10% of asylum seekers. The distribution has also been uneven across local authorities, with some accommodating none (e.g. Lincoln, Cambridge, North Norfolk, Great Yarmouth, West Suffolk) and some having more than one asylum seeker per 200 local residents (e.g. Hounslow, Halton, Belfast, Coventry), exceeding the limit set by the original dispersal policy.

In 2022, the Home Office announced the policy of ‘Full Dispersal’, distributing asylum seekers more equitably across all local authorities, requiring the providers to use an indexing tool to procure accommodation, taking into account factors beyond population size such as market availability, homelessness rate, and level of hate crimes. This has had some success. For instance, in 2014, 75% of local authorities (285 out of 375) hosted no asylum seekers while in March 2025 just 16% (59 out of 361) hosted none.

However, significant disparities remain, with asylum seekers clustered in certain deprived areas such as Glasgow in Scotland and Halton in the North-West. A Parliamentary inquiry found that providers intentionally avoid procuring dispersal housing in more expensive urban areas to maximise profit. These local authorities face significant pressure on services like schools, healthcare, and homelessness support. The Home Office provides an ‘asylum dispersal grant’ to local authorities (currently £1,200 per asylum seeker per year) but this is not sufficient to meet the full costs.

While the Home Office tried to use local housing in the dispersal areas, it was not able to provide enough such housing and so it increasingly turned to using contingency hotels, especially at the time of the pandemic and now due to asylum backlogs. At the end of March 2020, only 5% of asylum seekers were staying in contingency accommodation (mostly hotels), but by 31 March 2025, this figure rose to 35% (over 32,000 people). Asylum hotels are significantly more costly than other forms of dispersal accommodation. In 2024-25, they accounted for more than half of asylum support cost (£2.1 billion out of £4 billion). Despite the high costs, hotels are reported to be in poor condition. Asylum hotels have also been the subject of community tensions, most notably in Epping in Essex and Norwich in Norfolk. For these reasons, the government plans to end their use.

For asylum seekers, hotel closure means moving to dispersal accommodation or ‘large sites’, often in rural areas far from urban centres. This often means they lose access to support services. For example, third sector organisations that provide legal assistance, mental health and integration support are primarily based in urban areas. They may not have the resources to reach asylum seekers who are located in rural areas. One refugee support organisation in the East of England talked of the difficulty of reaching asylum seekers in rural dispersal accommodation: “[From] Lowestoft to Haverhill, opposite corners of the county, is about 75 miles apart, which with a small team is quite a challenge.”

They also said that availability of services, support, and public transport (in rural dispersal areas) is not a factor in the Home Office’s dispersal index/formula: “….if you’re lucky, the village will have one bus a day that goes to a nearby town…. Some may not have that. So, no, Serco don’t take any of that into account. You know, local school places… don’t take into account if it’s families. Provision of service and culturally appropriate services, not at all.” This affects the lives of the individuals: there are multiple reports of serious mental health crises at Weathersfield. In the first three months of 2024, there were 30 recorded occurrences of men self-harming, attempting suicide, or at serious risk of doing so, and over 160 safeguarding referrals made regarding suicide and self-harm.

It is also not clear whether the government will make any cost saving. Evidence suggests that the use of large sites may, in fact, be more expensive than hotels. The Home Office estimates that Wethersfield costs around £132 per person per night compared to hotels at £144.98. However, these estimates exclude the £105 million in acquisition, lease, and setup costs. A Parliamentary inquiry found that ‘large sites’ attract considerably more public attention, complaints, and media coverage than smaller sites. There are also added policing costs.

To conclude, closing asylum hotels may redistribute costs and pressures rather than reducing them, let alone eliminating them. Local authorities, voluntary organisations, and asylum seekers themselves are likely to bear much of the burden. Dispersal accommodation and ‘large sites’ can work only if they are accompanied by sustained investment in local services, support, and community engagement. There is currently little evidence of this.

By Ali Ahmadi, Research Associate, University of Cambridge and PhD student at Anglia Ruskin University, Catherine Barnard, Senior Fellow, UK in a Changing Europe & Professor of EU Law and Employment Law, University of Cambridge and Fiona Costello, Assistant Professor, University of Birmingham.