A York property owner who takes in homeless people could be forced to shut down.

Officers at City of York Council have recommended refusing a retrospective application by Graham Smith, the owner of Millfield Lodge, in Millfield Road, South Bank, to use the former guesthouse as a hostel for the homeless.

Mr Smith, who has run the property as a homeless centre since 2002, has had to reapply for planning permission following complaints from nearby residents. A report to be considered by councillors on November 3 advocates refusing permission - on the grounds that the building is contributing to higher crime and noise disturbances in the street, off Scarcroft Road.

But it has emerged the vast majority of people who stay at the Lodge are referred there by the council - which then pays for them to be there. In a planning report, evidence compiled by North Yorkshire Police showed the premises were "contributing to a high crime rate in this street, with incidents occurring at the premises and those found responsible for crimes on and off the site being housed there".

A police survey revealed that of 20 crimes recorded in the area in an eight-month period up to August 31, seven of them occurred at Millfield Lodge.

Residents in Millfield Road have sent in 68 letters of objection to the plan, including representations from a child care nursery and Scarcroft Primary School, and a 257-name petition.

Mr Smith accepted there had been incidents at the hostel in the past, but said the situation was now greatly improving.

"Over the last 18 months the demography has changed. We have a lot of couples now," he said. "I will appeal against a refusal of the application. It's ironic that this is the council's decision - they are paying these people to stay here."

Local ward councillor Dave Merrett said: "If the council is funding this in the first instance and then trying to ensure it is properly managed then it seems it has completely failed. I would welcome the planning officer's recommendation."

A City of York Council spokeswoman said: "The council has a statutory duty to support homeless people under housing legislation. However, it also has a statutory duty, as the local planning authority, to determine all planning applications on the basis of local and national planning policy, and as such, acts independently."

Updated: 09:32 Saturday, October 29, 2005