The council had directed its chief executive and head of planning to pursue “enforcement action” if the hotels had broken the rules by “changing use” in becoming asylum accommodation.
In a report, external released ahead of a meeting of the council next week, the city council said officers had concluded that “the character of the use of both of the hotels amounts, in our opinion, to a material change of use to use as hostels”.
However, it also noted that “enforcement action is discretionary”.
It said the council should act “proportionately” when responding to suspected breaches because of the potential public harm in doing so.
“In determining whether to take action, [the council] should weigh up whether the level of harm caused by the breach warrants taking action,” it added.
The authority concluded that “enforcement action is therefore not considered appropriate given the level of harm, cost to the public purse, wider societal impact and recent case law in the Epping case”.
Factors that contributed to the council’s decision included there being no complaints against the “use, management or operation” of the hotels, and potential pressures on local housing supply if alternative accommodation needed to be found for the current occupants following the closure of the hotels.