A refugee hostel will become a shelter for the homeless when Kosovars leave later this year.

Councillors agreed that Howe Hill Hostel, in Holgate, York, should house homeless families, easing huge pressure on City of York Council's budget to accommodate them in bed and breakfast hotels.

The present occupants, 33 Kosovars who were brought to York after escaping conflict in their home, are expected to have left the hostel by August at the latest when they would have returned to Kosovo or have been given asylum in Britain and re-housed.

It will then be used to ease the city's homelessness problem, which has risen by more than 100 cases in the past year.

In September last year 50 people were temporarily housed in bed and breakfast accommodation.

City of York Council estimates that this form of accommodation costs £180 per week, and the standard of housing is unsatisfactory.

Howe Hill could house about 13 families to a higher standard, costing City of York Council £25,000 in a year, compared with £80,000 for the same amount per year in bed and breakfasts.

Lesley Healey, the council's head of advice and housing assessments, said: "Howe Hill would give much needed relief and stability to homeless families and this could be achieved at a fairly minimal costs because of conversion work that has already been carried out." About £100,000 was invested in Howe Hill by the Home Office to make it suitable for refugees.

Previously it had been used as a residential respite centre for people with learning disabilities.

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