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The shelter for the homeless in Harris Terrace, Douglas closed its doors in January, just over two months after opening.
In a written reply to a House of Keys question, Health and Social Security Minister Eddie Teare told North Douglas MHK John Houghton a review of the operation of Kingswood House found that usage had been light, due to changed economic conditions.
Mr Teare said there was a fall in demand because private sector landlords were able to offer accomodation following the departure of immigrant workers in the building trades.
There was also a need to provide daytime services such as showering and washing facilities which could not be undertaken at Kingswood House due to planning conditions.
Kingswood House opened on November 18 and closed on January 26.
It was run by the homeless charity Kemmyrk.
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