The Home Office is to announce the closure of 11 asylum hotels this week as part of its pledge to close all such facilities by the end of this parliament.
The use of hotels to house asylum seekers has been controversial since it became widespread at the start of the Covid pandemic. Anti-migrant protesters have staged demonstrations outside hotels, claiming asylum seekers are living a life of luxury there.
There are almost 200 hotels in use, according to the government, accommodating 30,000 asylum seekers. Other asylum seekers – more than 70,000 people – live in other types of accommodation such as shared housing or military barracks.
Some of the protests turned violent, such as in Rotherham in August 2024 when protesters tried to set fire to a hotel with asylum seekers in it. Refugee NGOs say hotels are unsuitable for long-term accommodation, and a parliamentary investigation found the government had squandered billions on a “failed, chaotic and expensive system”. In evidence to the investigation, the Red Cross said it had to take £220,000 from its disaster fund to clothe asylum seekers living in hotels, some of whom had contracted scabies.
The Home Office is due to hold a private event this week, which it describes as an “industry day” for current and potential future providers of asylum accommodation. The department is not disclosing details of the time and venue until the last minute and those attending have to sign an NDA.
The meeting relates to the re-tendering of asylum contracts from 1 September 2029 until 31 August 2036, with a possible option to extend to 31 August 2039. The new contract, known as Future Asylum Contracts Accommodation, is valued at approximately £10bn and aims to move away from reliance on hotel accommodation. Senior sources among the Home Office’s current accommodation providers have raised concerns that the new contracts will significantly increase the number of contractors, could bake in inefficiency and end up costing taxpayers more.
The Home Office uses part of its overseas aid budget to fund asylum accommodation in a practice known as “in donor refugee costs”. These costs fell from £2.8bn in 2024 to £2.4bn in 2025.
Gideon Rabinowitz, the director of policy and advocacy at Bond, the UK network for NGOs working in international development, condemned the government’s spending of part of the aid budget on asylum seekers in the UK and said that while asylum seekers here should be supported, the money should come from Home Office budgets.
“Funding to support communities facing conflict and crisis worldwide fell by over £1bn in 2025, as 18% of the budget continued to be diverted to cover asylum costs in the UK,” Rabinowitz said.
“Life-saving humanitarian programmes, including education provision in Syria and healthcare programmes across Africa, have already been forced to close, and with even deeper cuts still to be implemented this year and next, the worst consequences are yet to be realised.”
A Home Office spokesperson said: “This government is removing the incentives drawing illegal migrants to Britain and ramping up removals of those with no right to be here. That is why we are closing every asylum hotel and moving asylum seekers into basic accommodation including ex-military sites.
“The population in asylum hotels has fallen by nearly 20% in the last year and by 45% since the peak under the previous government, cutting costs by nearly £1bn.”
