You’d have drugs and crime. Either crime to get drugs or crime for the sake of crime because of mental illness. You will also get people that will rip out the plumbing and wiring to sell. You will people that rip out the plumbing, wiring, cabinets, and doors because of mental illness. This is why it has to be state-owned and rehabilitation offered. Still costs less than policing, hospitalisation there are always threads of landlords that rent to people that “need a hand” that end up getting screwed. One guy said that his landlord will only rent to a homeless person if the helping agency.
This is why it’s useful to have tiered systems where people can graduate to better housing. At the bottom end are people who get a roof and a toilet under regular supervision, at the high end is publicly-assisted apartments integrated into the surrounding community and hopefully indistinguishable from other housing stock. With some stuff in between. You say that like all homeless people would otherwise be perfectly fine if given housing. I don’t know if you’re just naive or have simply had little exposure to the situation of rough sleeping
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