Mothers and their children are among thousands of homeless families in Hackney forced to live in cramped single hostel rooms as the borough’s housing crisis deepens.

Fewer than 3 per cent of privately rented properties in Hackney are now affordable to those on housing benefit, forcing the council to seek cheaper alternatives to accommodate hard-up families in crisis.

Some 784 households in Hackney are now living in hostels, costing £266 a week on average for a single room.

The average time people spend in this short-term temporary accommodation is four years.

Fiona Mcleod, 36, and her 14-year-old son were moved into a hostel off Kingsland Road last year when her housing situation reached crisis point.

She was forced to move out of her rented flat when her landlord died and she found it tough to find other affordable homes despite earning £27 an hour as a probation officer.

“My health was getting worse at the time because I was suffering migraines and they’d found a cyst at the bottom of my brain,” she said. “Being agency staff, if I was sick I didn’t get any money and I couldn’t keep up with the rent. And since then I’ve been applying to Hackney as homeless.”

Fiona and her son are now living in a single room at St Peter’s Way Hostel, where their beds are within touching distance of each other and the bathroom is infested with silverfish.

While Fiona has done her best to make the tiny room homely, she says her son’s mental health has suffered.

“He’s going through puberty in the same room as his mum,” she said. “Unless you stay in the bathroom after you’ve had a shower you have nowhere to change. We can’t have any visitors at all.

“My radiator hasn’t worked since September, so when it gets cold in here I turn the oven on and open the door. It’s cramped and depressing and I hate it.”

Fiona’s own physical and mental health has worsened and she feels isolated and alone.

The constant noise of shouting and screaming due to the many families crammed into the hostel also brings back memories of the domestic abuse Fiona suffered in a previous relationship.

“Obviously I’m extremely grateful that I’m not street homeless,” she said. “But that doesn’t mean living here is acceptable. And when you go around Hackney, you see the amount of new accommodation going up and no more of it is coming back into social housing – it’s all just so Hackney can be gentrified.

“They let everybody buy up their own council property and they never replaced them, and my generation is paying for that.”

Across a courtyard from St Peter’s Way is the Metropolitan Hostel, an imposing Victorian building known as Metro. People in both hostels told the Gazette they found conditions tough.

One mother with two toddlers in a single room says her children regularly kill cockroaches.

And a former teaching assistant who fell on hard times after a freak bus accident ruined her health said she has had chronic insomnia due to constant noise from the room above.

Metro and St Peter’s Way are owned by a private company, Blue Chip Trading Ltd, which made £2.7million profit last year. But all rooms are contracted to Hackney Council via property agent Finefair Ltd.

Finefair was the second largest supplier of temporary accommodation to Hackney last year and was paid £3.1m of taxpayers’ money. It said it was not responsible for conditions at Metro and St Peter’s Way.

A statement issued by a solicitor for Finefair said: “Landlords of the hostels are responsible for maintenance and upkeep of hostels. The local authority is responsible for the conditions of each room.”

It said silverfish had been treated in a “limited number of rooms” and pests are dealt with quickly. Finefair was unable to comment on allegations raised by the Gazette about the broken radiator and cockroaches, but said: “All parties involved in management of the hostels are dedicated to providing an excellent service and good quality accommodation to the individuals that require the use of hostels.”

Mayor of Hackney Phil Glanville said Metropolitan was one of the council’s “better hostels”.

Blue Chip Trading Ltd did not comment.

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Why is the council placing 784 households into hostels?

The mayor says the acute housing crisis means other accommodation is simply unaffordable to place the homeless in Hackney.

Phil Glanville says the council has a robust regime of annual inspections at hostels and negotiates the best contracts it can for temporary accommodation.

“We do work very hard to get the best possible deal for the council taxpayer,” he said. “But the nature of the housing crisis is the costs of all rents are increasing and the cost of temporary accommodation is increasing as well.”

The mayor says the pressure is now so acute that hundreds of people are on waiting lists to be moved from one type of temporary accommodation to another.

He said the council was experiencing a “perfect storm” of government failure over the housing crisis, caused by welfare reform, failure to invest in social housing and regulate rents.

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Who are the companies paid £26million of taxpayers’ money for emergency homes?

The Gazette’s research shows 96 companies were paid for providing temporary accommodation to Hackney Council last year.

They are a mix of private landlords, hostel owners, lettings firms and property agents specialising in providing accommodation to local authorities.

Among the top 10 providers are six property agents: Housing Action Management (£4.5m), Finefair Consultancy Ltd (£3.1m), J.J. Properties (£1.9m), Oliver Landon Ltd (£1.3m), Assetgrove Lettings Ltd (£970,000), and Dabora Conway Ltd (£860,000).

Two are companies operating private hostels: Parkcrest Properties Ltd (£1.1m) and Ridley Villas Ltd (£700,000).

One offshore company registered in the British Virgin Islands, Dulcet Property Ltd, received £1m.

Hackney mayor Phil Glanville said: “You are seeing more and more money going to private landlords.

“That’s been a choice of government to say the housing crisis is going to be dealt with through the private sector.”

He added: “If I didn’t have to use any of those providers I would be very happy. If we could house people in council housing or our own temporary accommodation we would. The market is doing very well out of the housing crisis.”

* The Gazette’s Hidden Homeless campaign is calling for urgent action to tackle the housing crisis in Hackney. Please pledge your support by signing our online form – it only takes a second.