The number of children’s homes in England has reached a record high – as Ofsted warns providers are focusing on cheaper housing rather than the needs of children.
Ofsted, which inspects schools and children’s homes in England, said 4,100 children’s homes of all types had registered by the end of March this year – a rise of 15% from the previous year.
It is the highest number ever registered with Ofsted, the inspectorate said.
The watchdog has warned of a “strong profit motive” as more homes spring up in areas where housing is cheapest.
Ofsted’s chief inspector Sir Martyn Oliver said while the increase might seem positive, “the rapid growth in the number of homes masks very significant problems with location, affordability and suitability”.
Local authority spending on looked-after children rose from £3.9bn in 2015/16 to £8.1bn in 2023/24, taking the average annual cost for each looked-after child to £97,200.
The inspectorate said it had begun nearly 900 investigations during the 12 months to March into potential unregistered homes, “which often charge exorbitant fees to local authorities that have run out of options”.
Total spend on children looked after 2015-16-2023-24
Fees for places in unregistered homes could be as high as £30,000 a week per child.
Inspectors warn that the situation is especially dire for children aged 10 to 17, who now make up a growing share of those entering care. There were particular challenges housing children “with complex needs”.
The report highlights a “significant shortage of appropriate accommodation”, meaning councils are “often forced” to use makeshift or unregistered provision simply because no regulated placement exists.
In some cases, children are left living in settings that lack trained staff, safeguarding oversight, or the stability they urgently need.
Ofsted said this is a “crisis both for children and for local councils, whose budgets cannot hope to keep pace with the spiralling costs” and asks the Government to work with councils “to drive out all use of unregistered children’s homes”.
Ofsted warns this sharp rise in unregistered arrangements is not a sign of councils deliberately circumventing regulations, but the result of systemic failure.
Vulnerable children
The Ofsted report also warned that some of the most vulnerable older children find themselves homeless.
As of June 2025, 172,400 children were homeless and living in temporary accommodation.
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Ofsted warns that children in such situations face greater risks, from exploitation to mental health decline, and are less likely to attend school, access healthcare or receive consistent support.
Ofsted calls for urgent reform
Sir Martyn said: “The most vulnerable children in our society deserve loving and stable homes.
“Instead, profit motive is increasingly dictating the location and ownership of children’s homes.
“As a society, we are failing these children. We can and must do better.”
Sir Martyn says the crisis in suitable care placements requires “urgent national action”, warning that vulnerable teenagers are being left in “deeply unsafe and inappropriate situations” due to sheer lack of alternatives.
The report makes clear that the scandal is not confined to a handful of failing councils, it is systemic.
