[MargaretR]

There is a legal loophole which nobody has tried to exploit yet that I know of.

Hotels can have a smoking lounge for residents.

Maybe the cost of building or converting space into a dormitory (and getting planning permission) is a 'put off'
The dorm needn't be posh because nobody will be expected to use it.
A receptionist at the entrance to the smokers lounge will charge a small 'bed fee' and book them in.

That way they can be treated as overnight residents. If any of them are tempted to use the dorm they could be deterred by an exhorbitant extra charge to be added for heat, light, hot water and bedding.

In the event of a raid by council inspectors, persons in the smokers lounge would produce a bed ticket and be shown the dorm.