Capital Letters will cease operating by the end of 2025

London’s not-for-profit organisation for helping find homes to rent for homeless people, Capital Letters, has announced it will shut down by the end of 2025.

Among the issues are London’s landlords selling up and those who did rent at Local Housing Allowance (LHA) rates having to increase rents beyond LHA rates to survive.

The closure comes after six years of providing nearly 6,500 homes and saving taxpayers an estimated £240 million.

Owned by 10 London boroughs, the organisation was established to tackle homelessness following the Homeless Reduction Act of 2018 and the rising costs of temporary housing, initially backed by MHCLG grants.

Despite its efforts, ongoing issues have intensified since its launch.

Unprecedented rise in rental prices

The organisation’s chief executive, Sue Edmonds, said: “The impact of the post-pandemic housing crisis both in the unprecedented rise in rental prices and changes in the financial markets has made accessing affordable capital to deliver more homes for London impossible.”

She says that rent inflation in the capital halted their success in securing safe, secure and affordable homes for those in need, as landlords increasingly demand rates above the Local Housing Allowance (LHA), which benefits recipients rely on.

With only 1.6% of London’s rental market now at LHA levels — far below the intended 30% — and landlords exiting the market, the organisation says it faced unsustainable pressures.

End the project

Ms Edmonds added: “With a very heavy heart, we have come to the conclusion that – in the absence of any alternative funding or income generating options that would enable Capital Letters to continue to operate – it is better to proactively take a considered and prudent decision whilst we remain solvent to end this brilliant project with probity and our proud legacy intact.

“I’m immeasurably proud of what my team has achieved over the past six years and the positive impact Capital Letters has had driving new ways of working and approaches to solving homelessness across London.”

Paul Doe, the chair of the Capital Letters board, said: “This is a very sad day for London. The value of Capital Letters goes beyond the company’s purpose to support member London boroughs to access an improved supply of good quality accommodation to prevent and relieve homelessness, it’s been a mechanism to pull together 10 London boroughs to collaborate and to find better ways to address homelessness.”

He also noted the organisation’s ability to step in and manage housing services for the London Borough of Merton, saving both time and resources.

Helped increase LHA rates

The organisation also played a significant role in advocating for housing solutions, participating in inquiries and roundtables on commercial-to-residential conversions, temporary accommodation and empty properties.

Its lobbying helped increase LHA rates, and they partnered with various groups on research into landlord sentiment amid new regulations.

Cllr Lynne Hale, the deputy mayor of Croydon and chair of the Boroughs’ Representative Body, said: “It’s a hugely difficult time for London boroughs, sourcing homes for families experiencing homelessness, and the loss of Capital Letters will make it harder.”