The Home Office has built up a stock of 16,000 properties for asylum seekers as young people struggle to get on the housing ladder.
An acute shortage of homes for young workers and families has gripped Britain in recent years, with house prices continuing to spiral.
Contractors from the Home Office have been offering landlords five-year guarenteed full-rent deals to take over the management of properties.
The move is being made in an attempt to cut the £8million a day cost of housing migrants in hotels.
Efforts are being made to cut the £8million daily cost of housing migrants in hotels
PA
Dozens of hotels holding asylum seekers were due to shut by the end of last month.
Another 50 will close by spring amid growing concern from local residents.
There were around 50,000 asylum seekers in 400 taxpayer-funded hotels at the end of last year.
Properties from the private rental and social housing markets are being used to house more than 58,000 asylum seekers across England, Wales and Scotland.
The number in so-called “dispersed accommodation” has doubled compared to where it was a decade ago.
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There has been opposition to using hotels to house migrants
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Daily costs for dispersed accommodation can fall to as low as £30, compared with £150 for hotels.
However, there are concerns the situation could create “ghettos” and limit “integration”.
A Home Office insider told The Daily Telegraph: “The department’s strong preference is for dispersal accommodation because it is so much cheaper and much more discreet than hotels. That’s not to say it’s not unpopular.
“Some of the contractors are taking properties in pretty normal streets. You can buy yourself a £300,000 house and suddenly find your next-door neighbour is a house full of asylum seekers.
A picture of Channel crossing migrants arriving in KentPA“MPs are starting to report problems as a result of this.
“It has also been very heavily clustered in places where property is cheap – Hull, Bradford and Teesside. It is potentially damaging to these places because it creates ghettos which are terrible for integration.”
Three contractors have been paid £4billion over 10 years to provide accommodation to asylum seekers.
As many a 30,000 homes may be needed to end the use of hotels as the Government can substantially reduce the 100,000 backlog in asylum claims, The Telegraph has claimed.
There is an acute shortage in the housing market impacting young workers and families
PAHowever, the report comes after 1.2 million people were registered on council housing waiting lists at the end of 2021/22.
The arrangement seemingly suits landlords, with many experiencing rental arrears.
An expert claimed: “If you’re a landlord, wouldn’t you take a five-year contract where they’re going to pay all the rent regardless.”
A Home Office spokesman said: “We continue to work across government and with local authorities to identify a range of accommodation options to reduce the unacceptable use of hotels which cost £8 million a day.
"The government remains committed to engaging with local authorities and key stakeholders as part of this process.”
The spokesman was unable to disclose anymore information on the figures, instead adding: “We are working to procure sufficient dispersal accommodation to meet our statutory obligation.”