I think the detention centres can be like that. They've had problems. I don't know if the asylum seekers have resources to pay - I would assume not. They spend thousands on people smugglers to get them here from France (a safe country that they don't like as much), but I tend to assume that when they arrive they don't have much money. That's why allowing them to work would help alleviate one problem. It doesn't magic up a block of flats though. The UK is building as fast as possible - and the government has pretty much eradicated planning restrictions on new builds (to the detriment of wildlife and habitats) - but it's impossible to build as fast as the rate of migration.

On the topic of one room, they have a canteen, medical facilities and outside areas. They're not allowed to leave the detention centre while they're initially being processed, before they're moved out to hotels, but I don't think they're restricted to one room. Or they wouldn't be able to go to the canteen etc.