I work as a legal housing adviser, primarily with homelessness cases. This will be a long post, apologies.
Simply put, the reason councils advise this is because it otherwise means that they will be paying for costly emergency accommodation, usually bed and breakfast. It also gives the authority more time to make enquiries as to whether an applicant is actually owed a duty for any assistance under the Housing Act 1996. Trust me, they don't drag out their enquiries for no good reason- they're bloody inundated and homelessness rates are increasing at a terrifying level at the moment.
I have previously, however, successfully submitted a review of the decision that a tenant was intentionally homeless by leaving after the notice expiry, but before the bailiff's warrant. You can only be intentionally homeless from a property that it both 'available' and 'reasonable to occupy' in law, and I made the case that the financial burden placed on the tenant from the associated court costs and the risk of a CCJ made it unreasonable to continue to occupy. I doubt it would stand with most authorities though, there needs to be a good old bit of High Court case law on the matter I feel!
Only certain groups of people aren't entitled to emergency accommodation or any housing/ financial assistance from the local authority, and it's simply the case that many tenants aren't ever owed this duty. Subsequently, they have no options but to stay where they are until the execution of the bailiff's warrant because they do not have the means to find alternative accommodation. Homeless applications are lengthy, and pretty grueling on the part of the applicant.
As always, I want to clear up the myth that rent arrears= intentional homelessness. Not always the case, depends entirely on whether the accrual of arrears was a deliberate act or omission. Redundancy is a good example of when arrears often accrue, but the tenant isn't found IH.
The council absolutely do not provide emergency or long-term accommodation to IH families with children, but social services often pick up the tab instead. Sometimes, the poor bastards have their children taken into emergency foster care while they become street homeless or sofa surf.
Most people making homeless application, in my experience, are doing so because the landlord is selling or because they want the property back, and not for rent arrears/ other breach of tenancy.
I'm sure it's just the way you've expressed yourself rather than not knowing the law, but it's entirely wrong to say that a property is being 'wrongfully occupied' beyond the notice seeking possession expiry. It's not. An assured shorthold tenant has a clear right under the Housing Act 1988 to remain in the accommodation until the execution of a bailiff's warrant. You may not like it, but I quite agree with TheHappyMonkey in saying that as a landlord, you take a calculated risk, and unfortunately, sometimes it ends up being a massive fuck up.
That said, I am very much aware as to how devastating it is for landlord when they do take a chance, are as sensible as possible, and it still goes wrong. It's alright if you've got no mortgage or enough savings to keep the mortgage paid, but this is frequently not the case, and it can sometimes leave the landlord at risk of possession proceedings too.
However, my feeling is that beyond any fixed term (so the first 6 months if you allow a rolling contract beyond that) landlords have a very simply and straightforward way of obtaining possession, and that the UK has some of the most lenient laws about security of tenure in Europe.
Also, did you attend the possession hearing and request a money judgement? That way, the tenant has a court order in place to pay you the sums due, including court costs. I appreciate that you're not getting your rental income for the time-being, but it does mean you can ultimately pursue the money due to you.