Plans to demolish a sinking bungalow that cost £250,000 to repair and replace it with nine new flats has been thrown out by Croydon Council.
It comes as residents fight nearly identical approved plans on the house next door in Upper Norwood.
But the owner of the house that was due to be demolished said his home has been “plagued by subsidence” and is unsuitable for a family to live in.
The plans for 21 Downsview Road were put forward by Hambridge Homes.
Residents have been fighting new flats on their road with more than 1,800 signing a petition to “save Downsview Road”.
This document dating back to 1927 was written by the original landowner William Ingram and is part of the property deeds of the 40 homes in the road off Beulah Hill.
The developer was forced to stop work in April on similar plans for nine flats at neighbouring number 19 after residents brought a legal case against them.
Work is unable to restart until there is a decision on the case.
The latest plans were discussed at a Croydon Council planning meeting last week.
At the meeting, councillors were told that the restrictive covenant was not a “material planning consideration”.
Resident Caroline Fenech said: “Downsview Road is unique to the north of the borough comprising of only 40 dwellings lined with bungalows to the east and detached houses to the west.
"This small residential road has seen an increase of 100 per cent in dwellings with substantial number of flatted developments to the northern end of the road.”
On the road, 33 flats have been built on four bungalows and another application has been approved for five flats and a three-bedroom house.
But John Przednowak, owner of 21 Downsview Road, said the bungalows are energy inefficient and unsuitable for young families.
He said: “Over the years, many of the mostly 100-year-old bungalows have been intensively enlarged and many are plagued with ongoing subsidence issues.
"This property has been underpinned twice at a cost of more than £250,000 at today’s prices.
“Most of these houses do however sit on large plots, so therefore it makes sense that in these times of land and accommodation shortages they be demolished to make way for light, bright energy efficient alternative that people actually want to live in.”
Councillor Patsy Cummings spoke against the plans and urged the committee to refuse the application.
She said: “Construction at [number 19] by the same developer who is party to these court proceedings has been suspended since April pending the judge’s ruling.
"Although the civil matter is separate to this matter it has a huge bearing on the development.”
The plans were refused with eight votes to one on the grounds that it would impact on neighbours and the flats would be out of character and overbearing on the road.
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