Crisis has taken aim at the exempt housing sector, accusing providers of exploiting the sector to charge higher rents without giving tenants the support they need.
Exempt accommodation is used to house people who need help, such as those who have recently left prison, fled domestic abuse or been homeless.
Unlike regular rentals there are no caps on Local Housing Allowance, meaning providers can charge higher rents that are entirely covered by the government through housing benefit.
Jon Sparkes, chief executive of Crisis, said: “The exempt accommodation sector is dangerously under-regulated.
“There are some good providers out there, but so many others are motivated only by money and are able to charge higher rents for essential support they have no intention of providing.
“It is unacceptable that the system lets them get away with it. People trying to end their homelessness, fleeing domestic abuse or tackling complex addiction issues are being forced from one trauma to another – all at huge expense to the public purse.
“We desperately need stronger regulation to keep the wrong people out of the sector and ensure that quality support and accommodation is provided to people in some of the most vulnerable circumstances.”
Nearly 154,000 UK households live in this housing type, 62% more than five years ago, Freedom of Information data obtained by Crisis found.
Through a separate FOI, provider Prospect Housing has revealed that at least £816m was spent by government on exempt accommodation in the last financial year alone.
A Department for Levelling Up, Housing and Communities spokesman said: “It is completely unacceptable for any landlord to abuse the exempt accommodation system and we will not stand for it.
“Supported housing must be of good quality and provide the right support for residents. That is why we recently ran pilots in five areas, backed by £5.4m, to crack down on rogue landlords, including increasing inspections and enforcement of accommodation standards.
“We are urgently reviewing the findings from these pilots to work out what further action is needed.”