A historic Bath building is set to get a £1million revamp so it can provide "much-needed" supported accommodation for former rough sleepers.

Number 23 Grosvenor House was recently handed back to Bath and North East Somerset Council in a controversial deal that will see the social housing provider walk away with a £450,000 pay out.

The grade I-listed former hotel's 20 self-contained flats are currently occupied by people who were on the streets until the government ordered local authorities to get "everyone in" at the start of the coronavirus pandemic.

A notice for a decision due to be signed off by council leader Dine Romero and cabinet member Tim Ball after January 16 says: "This was an ideal response to Everybody In and ensured former rough sleepers were able to quickly and safely self-isolate in small flats, with food delivered daily.

"Support for the occupants and management of the building was and continues to be undertaken by Julian House, with additional mental health and substance misuse support coming from AWP and DHI respectively."

Following the "everyone in" directive, in July the government launched its £266million Next Steps accommodation programme to prevent those people who were helped returning to the streets. B&NES Council secured £2.1million.

Its plans for 23 Grosvenor Place – which is valued at £1.6million and it had intended to sell – are "significantly different" to the current use.

The decision notice says: "The property will transition from the current provision, emergency accommodation for people coming in off the streets during the pandemic, to supported housing, where people with a history of rough sleeping are able to continue their development of independent living skills following a period of recovery in Manvers Street Hostel.

"Their complexity of needs will be reduced, and the focus will be on rebuilding their lives and moving on into fully-independent accommodation.

"The scheme will be owned and maintained by the council, with allocations overseen by the council. A multi-agency panel chaired by housing services and including Julian House, DHI, AWP, Home Group and Virgin Care will consider all nominees.

"The headline criteria include the need for a local connection to the Bath and North East Somerset area, ensuring that maximum benefit is gained for local residents, and a readiness to move towards independent living."

23 Grosvenor Place had been managed by Guinness Partnership but it approached the council to surrender the lease 39 years early, saying the former hotel did not lend itself to good quality affordable housing.

In a deal blasted as "not justifiable" by critics, the authority agreed to hand over a £450,000 "reverse premium". The decision notice says that payment "remains the case and is allowed for in the business case with the acquisition financing costings, borrowing costs being supported from long-term revenue rentals".

The council is set to spend £1million to bring 23 Grosvenor Place up to standard and "push the boundary" of what can be achieved in a grade I-listed property, potentially including solar panels, secondary glazing and modern electric heating.

Setting up the supported housing scheme is expected to cost £220,000.

The council is also set to use £633,000 in Next Steps funding and £317,000 from an affordable housing grant to buy two four-bedroom properties on the open market to house former rough sleepers.

The accommodation will be offered to "older, entrenched rough sleepers for whom living alone is too challenging and which presents a barrier to settling into independent living away from the street".

The residents will have access to support to improve their health and wellbeing, develop the skills to hold a tenancy, and start to look at employment and long-term housing options.

Again, allocations will be overseen by a multi-agency panel.

The Next Steps programme also provided £255,000 in revenue funding to allow support for rough sleepers housed through "everyone in" to continue until the end of March.

The council was approached for comment.