Guidance

Homelessness Prevention Grant 2025-26: technical note

Published 18 December 2024

Applies to England

Background

In 2025-26, we are allocating £633.2 million^{[footnote 1]} in funding through the Homelessness Prevention Grant to support local authorities to deliver services to prevent and respond to homelessness. This provides an uplift of £192.9 million from 2024-25.  

Ringfence

For 2025-26, we will introduce a new ringfence within the Homelessness Prevention Grant, to maintain prevention activities during this period. This will mean that 49% of local authorities’ funding allocation must be spent on prevention, relief and staffing activity. The 49% within this ringfence may not be spent on temporary accommodation. This proportion is based on spend declarations submitted in 2023-24, which showed that an average of 49% of total Homelessness Prevention Grant funding was spent across these three activities. The regional analysis of 2023-24 spend declarations has been included below.

Proportion of the Homelessness Prevention Grant funding spend by spend category, 2023-24

	Staffing	Prevention and relief	Temporary accommodation	Other
North East	46%	22%	27%	4%
North West	35%	31%	30%	4%
Yorkshire and the Humber	48%	19%	31%	1%
East Midlands	38%	21%	39%	2%
West Midlands	34%	33%	30%	3%
East of England	34%	19%	44%	3%
London	23%	16%	60%	1%
South East	28%	20%	48%	3%
South West	36%	18%	45%	1%
Total*	29%	20%	49%	2%

^{*Totals may not sum due to rounding}

Technical note

This document provides a technical description of how we calculated the allocations for the Homelessness Prevention Grant in 2025-26. We consider the allocations in two stages:

1. The first stage rolls over 2024-25 allocations, totalling £440.4 million.
2. The second stage considers the allocation of the £192.9 million uplift for 2025-26.

1: 2024-25 allocations roll over

We allocate the first £440.4m using local authorities’ 2024-25 funding allocations to ensure no authorities experiences a cash loss compared to their 2024-25 allocation. 2024-25 allocations were distributed in two parts:

• The original allocation of 2024-25 Homelessness Prevention Grant funding totalled £331.3m, including the core £310m HPG funding, a £7.1m top up to ensure no authority experienced a cash loss compared to their 2022-23 allocations after transitional arrangements were applied, and £14.2m for Domestic Abuse New Burdens funding. The approach is outlined in detail in the Homelessness Prevention Grant 2023 to 2025 technical note.
• Top up funding for Ukraine and Homelessness pressures for England in 2024-25 totalled an additional £109.1m. Further information can be found in the Allocations of UK-wide allocation of £120million funding for Ukraine and Homelessness pressures 2024-2025: technical note.

2: £192.9 million uplift for 2025-26

We will allocate the remaining £192.9m for 2025-26 using the same formula applied for 2023-24 and 2024-25 allocations, following consultation on technical changes to the formula in July 2022. Details on how this funding is distributed can be found in the Homelessness Prevention Grant 2023 to 2025 technical note.

The following 5 changes apply, compared to 2024-25: 

1. We use the following updated data sources:

• MHCLG homelessness statistics (H-CLIC) from the year to March 2024 were used to assess levels of homelessness prevention and relief cases.
• ONS private rental market summary statistics in England for the year to September 2023 were used to assess private sector rental costs in different areas.
• MHCLG local authority revenue expenditure and financing data – revenue outturn housing services RO4 from the financial years 2021-22 to 2023-24 inclusive were used to assess 3-year average historic spend on temporary accommodation costs.
• The number of housing benefit and universal credit claimants at May 24 were used as a proxy to reflect the relative number of households at risk of homelessness. This information can be found on DWP stat xPlore.
• The 2021 Area cost adjustment is an update to the COVID-19 ACA and is a tool used to measure the variation in the cost of providing services for local authorities in England.

2. We do not apply the £40,000 minimum allocation levels because we consider that this floor is already applied in the rollover of 2024-25 funding (in the first stage).

3. We do not apply transitional arrangements. We have ensured that there are no cash losers by rolling over 2024-25 allocations (in the first stage).

4. There is no bespoke adjustment made for Domestic Abuse new burdens funding. The impact of applying priority need to people made homeless as a result of domestic abuse (legislative change made in 2021) is now captured in the baseline data used to determine the level of overall homelessness funding and is no longer calculated separately.

5. The Homelessness Prevention Grant formula does not account for the council’s ability to fund services through its own locally raised resources. The £192.9m uplift is subject to an equalisation adjustment to account for the varying ability of councils to raise income. This is done as follows:

• We calculate the total revenue raised from an additional 1% on council tax for all local authorities in 2025-26 based on existing core referendum principles. (Using published council tax statistics)
• This revenue raised from a 1% increase on council tax is notionally added to the £192.9m of HPG funding.
• We calculate the share of funding each council would receive from this combined amount if distributed using the HPG formula.
• Where an individual authority can raise more from 1% additional council tax than its HPG share of the combined amount, its allocation is set to zero rather than a notional negative amount.
• For the remaining authorities we calculate the difference between their HPG share of the combined amount and how much they can raise individually from 1% additional council tax.
• These remaining allocations are then scaled proportionately. We do this separately for London and the Rest of England, so that equalisation is redistributed within and out of London but not between them, to account for high levels of homelessness in London.

1. £633.2 million is not equal to the sum of its component parts (£440.4 million + £192.9 million) due to rounding. ↩