Asylum seekers can continue to be housed at the Bell Hotel in Essex, a court has ruled.
Epping Forest District Council (EFDC) had wanted to secure a High Court injunction that would block them from living there.
It took legal action against Somani Hotels, the hotel owner, claiming that accommodating asylum seekers there breaches planning rules.
Lawyers for EFDC said the housing of asylum seekers is a "material change of use" and has caused "increasingly regular protests".
The Home Office intervened in the case, telling the court the council's bid was "misconceived".
Now Justice Mould has dismissed the council's claim, saying: "I have not been persuaded that an injunction is a commensurate response to that postulated breach of planning control."
He added that there was a "continuing need" for hotels to supply "contingency accommodation" to asylum seekers, and that this statutory responsibility was a "significant counterbalancing factor".
He said the council had also not provided evidence of its argument that the asylum seekers had a propensity towards crime or anti-social behaviour.
He argued that he needed to see an "evidence-based" and "statistically sound analysis" proving this phenomenon, but insisted "there is no such evidence before the court".
He said: "The fact that persons accommodated in asylum accommodation... from time to time commit criminal offences or behave antisocially provides no reliable basis for asserting any particular propensity of asylum seekers to engage in criminal or anti-social behaviour.
"Persons who are members of the settled population also commit crimes and behave antisocially from time to time."
His remarks follow the deporting of Hadush Gerberslasie Kebatu, an Ethiopian national who was charged with sexually assaulting a girl in Epping while housed at the hotel.
Kebatu, who had arrived in the UK only days earlier, was jailed for 12 months in September, mistakenly released from prison, and re-arrested, before being given £500 to leave the country.
Amid the controversy, the hotel has become a hotspot for protests.
Mr Mould referred to the protests as he dismissed the council's planning concerns.
He said: "The claimant's desire to find a swift resolution to the disruption to public order and the community tensions which followed the outbreak of street protests on 11 July 2025 was reasonable.
"It does not however follow that the solution lay in an application for an injunction."
He continued: "Public opposition to the development of land, even if that opposition manifests itself in street protests, is not in itself evidence of planning or environmental harm generated by the development to which there is such strong objection."
The court's decision is already sparking political blowback.
Shadow home secretary Chris Philp of the Conservative Party said: "This is a dark day for local democracy and a slap in the face to the people of Epping.
"A Labour government has once again put the rights of illegal immigrants above the rights of British citizens.
"The people of Epping have been silenced in their own town. Their council fought for them, their voices were ignored."
Referring to the Home Office's intervention in the case, he added: "Labour's lawyers fought tooth and nail to keep this hotel open, even after a migrant housed there was jailed for sexually assaulting a teenage girl."
Labour countered that Mr Philp had "some brass neck".
A party source said: "If he wants to understand why there are so many asylum seekers in hotels, I suggest he casts his mind back to his time in the Home Office. He was the one opening all these hotels.
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"Or perhaps he could ask why the shadow justice secretary, Robert Jenrick, bragged about 'ramping up' their use. The Tories opened these hotels. This Labour government will close them."
A Home Office spokesperson pledged every migrant hotel would be shut.
They said: "We are furious at the level of illegal migrants and asylum hotels in this country.
"This government will close every asylum hotel. Work is well underway to move asylum seekers into more suitable accommodation such as military bases, to ease pressure on communities across the country.
"We are working to do so as swiftly as possible as part of an orderly, planned and sustained programme. This judgment allows us to do that."
Amid protests outside the Bell Hotel, EFDC was granted a temporary injunction earlier this year, which would have stopped 138 asylum seekers being housed there beyond September 12.
But this also fell flat when the Court of Appeal found the decision to be "seriously flawed in principle".
A previous hearing heard that the hotel first housed asylum seekers from May 2020 to March 2021.
It then reopened as a hotel for three months in August 2022, but the owner's lawyers said demand was "greatly reduced" so it reverted to housing asylum seekers.
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