The cost to British taxpayers of housing asylum seekers in hotels has risen by more than a third, underscoring the financial burden facing the government even as the number of people accommodated in hotels falls sharply.
The Home Office said the average cost of hotel accommodation had reached £199 per person per night in April, up 37 per cent from the £144.98 figure provided by the department last October.
That equates to almost £1,400 a week for each asylum seeker housed in a hotel, or roughly £72,600 a year if the accommodation were maintained at the same rate.
The increase comes despite Labour’s commitment to close the asylum hotel estate entirely by the end of the current parliament, and as ministers accelerate efforts to move people into cheaper forms of accommodation.
Home Office minister Anna Turley told the Home Affairs Committee that the higher average cost was partly the result of the way hotels were being closed.
“This figure has increased since the figures we last provided in October 2025, as hotel closures are being implemented in phases.
“As occupancy falls ahead of full site closure, the department continues to incur costs for some unoccupied rooms, which increases the average cost per person accommodated.”
The figures illustrate the financial tension created by withdrawing from hotel contracts. As individual sites approach closure, the government can continue to incur costs for rooms that are no longer occupied, pushing up the average expenditure attached to those still using the accommodation.
At the same time, the number of asylum seekers living in hotels has fallen substantially.
There were 16,021 people in asylum hotels at the end of June, down from 36,273 at the end of September last year. The latest figure is 71 per cent below the peak of 56,018 recorded in September 2023.
The number of hotels in use has also declined, from 200 at the end of September last year to 160 by the end of June.
The government’s alternative accommodation strategy is designed to reduce the cost of supporting asylum seekers while removing the political and financial pressure associated with large hotel contracts.
Rented “dispersal” accommodation, including houses in multiple occupation, costs about £25 per person per night — a fraction of the average hotel cost.
Labour has sought to accelerate the transfer of asylum seekers into privately rented properties and former military sites while attempting to increase the speed at which asylum claims are processed.
Prime Minister Andy Burnham reiterated after entering Downing Street that Labour would end the use of asylum hotels entirely by the end of the current parliament.
The cost figures have emerged amid a separate dispute over the government’s plans for a new overnight visitor levy.
Regional mayors are being given powers to introduce charges on stays in hotels, bed and breakfasts and holiday lets across England. But taxpayer-funded asylum accommodation will be exempt because it is classified as temporary accommodation.
The exemption has prompted criticism from Conservatives, who described it as “utterly outrageous”, while representatives of the hospitality industry have warned that the levy could raise costs for businesses and holidaymakers.
The dispute highlights the increasingly complicated economics surrounding Britain’s asylum system, where ministers are attempting to reduce accommodation costs while dismantling a network built up rapidly during the surge in small-boat arrivals.
Beyond hotels, a further 73,068 asylum seekers were being accommodated in other forms of taxpayer-funded housing at the end of June.
The government therefore faces a broader challenge than simply closing the remaining hotels. It must transfer thousands of people into alternative accommodation without allowing the cost of the wider asylum-support system to rise as hotel contracts are wound down.
The Home Office said the direction of travel remained clear.
A spokesman said: “The Government is closing every asylum hotel, saving taxpayers over £1billion on asylum support since the election.
“Numbers in asylum hotels have been slashed by 50 per cent in the last year and 71 per cent since the peak in September 2023.
“We are working to fairly house asylum seekers across the country, moving asylum seekers into alternative accommodation, including former military sites which are designed to be self-contained to reduce impact on the local community.”
For ministers, the falling number of people in hotels provides evidence that the policy is being unwound. But the rising cost per person demonstrates the financial difficulty of managing the final stages of the withdrawal.
As contracts expire and occupancy falls, the government is effectively paying more for fewer people — at least temporarily — before the promised savings from closing the hotel network can be fully realised.
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