There is a projected overspend of £3.5m this year for Redbridge council in providing temporary accommodation for homeless families, a report has revealed.

An action plan is set to be decided this week to deal with the “growing problem” of housing in the borough, with £3.5m overspend predicted in the financial year of 2015/16.

The housing supply in Redbridge is among the lowest in London despite the population being the third fastest growing in the country.

Eviction from the Private Rented Sector (PRS) is now the biggest single reason for homelessness in Redbridge, 230 of the 498 households the council accepted a homeless duty to from July 2014 to June 2015 were evicted from the PRS.

The council said that this overspend was worsened by the fact it is unable to get a supply of new temporary accommodation at reasonable rates.

This means it has to house people in expensive nightly let accommodation, plus an additional 60 households having to be placed in bed and breakfast accommodation in 2015/16.

The council said it is working with Swan Housing, which is redeveloping the Claire and Repton Estate in Clayhall, which will provide 150 new units of which 78 will be affordable rent homes.

A project of development of new homes, by purchasing and repairing empty or run down properties, has so far acquired eight properties in the borough.

Labour Councillor Ross Hatfull, cabinet member for housing, said: “Creating more homes is a priority for us and we will continue to strive to find sites for new housing.

“I am really pleased with the current options we have looked into and we will continue to look at ways in which we can tackle our growing need for affordable housing.

“The borough’s first housing zone will deliver 2,000 new homes in Ilford Town, including 500 affordable homes.

“The housing zone homes will be delivered by March 2021.

“Unfortunately the difference between rents levels and housing benefit rates is reducing the council’s ability to procure temporary accommodation in London from private landlords at a time of growing homelessness, meaning we have a growing problem to face.”

Options will be discussed at neighbourhood and communities service committee on the evening of October 7 at Redbridge town hall in Ilford.