British council leaders have warned local authority could go bankrupt dealing with the fallout from a surge in the number of homeless families.
Some town halls are already spending between a fifth and half their budgets on emergency accommodation for those left destitute by rising rents and increasing numbers of evictions of tenants.
Even authorities in some wealthy rural districts are struggling to meet their obligation to provide temporary housing to families with children, often in bed-and-breakfast hotels, as the homelessness rate has doubled in some areas.
"Unless the government acts now, many of us will go over the edge financially, with a devastating impact on local services," said District Councils’ Network housing spokesperson Hannah Dalton. "The decline of the safety net which district councils provide will hit the most vulnerable members of our communities hardest."
Causes identified included sharp practices by landlords, including "flipping" — evicting paying tenants and then offering the same home to the council as temporary accommodation for homeless families — at much higher rent. Another is that councils must compete for available temporary accommodation with companies contracted by the Home Office to house asylum-seekers.
Many hotels around the country are already being used to house migrants, as the surge in people-trafficking across the English Channel has overwhelmed reception centres and municipal housing stocks.
Other problems include homeless families commonly being put up in miles from their children's schools.
Liberal Democrats party Chelmsford city council leader Stephen Robinson said the crisis was the result of decades of not enough house-building.
"If the crisis in homelessness is not addressed, it could bankrupt very many district and unitary councils within two years, with those in south-east England at particular risk," Robinson warned.
The Lib Dem leadership has previously appealed to popular NIMBY (Not In My Back Yard) sentiment by opposing the Conservative government's 2019 election pledge of 300,000 new homes a year — since downgraded to 1 million by the next election.
But at the party's last annual conference in September, delegates voted against leader Ed Davey's attempt to drop a 380,000-homes-per-year pledge from its manifesto.