HEREFORDSHIRE Council has been ordered to pay an undisclosed sum to a developer after failing to prove that it had a five year housing supply.
Planning inspector Neil Pope was asked to look into the council's refusal to grant permission to build 85 homes near Belmont Abbey after Lioncourt Homes appealed against the local authority's decision.
The proposal included landscaping and parking provision alongside the homes that would have been built at Home Farm.
Councillors decided against the scheme in December 2012, stating that the proposed site lies outside the settlement boundary for Hereford and would impact on the visual and landscape character and biodiversity interest of the area.
Other reasons for the decision included the site lying close to a landfill site and the application not being accompanied by a completed section 106 agreement.
Concerns were raised from those who lived close to the site regarding traffic problems at the Ruckhall Lane junction off the A465, and the possible impact on Belmont Abbey.
Mr Pope agreed with the council's decision and dismissed the appeal.
However, he stated that the council still has to pay Lioncourt Homes some of the costs of the appeal proceedings after the developer highlighted issues relating to housing supply.
"My findings lead me to the view that, on the basis of the council's housing requirement, it does not have a five year housing housing land supply," said Mr Pope.
"If the appellant's requirement is used, the deficiency is much greater, but would be more than 1.75 years supply.
"This weighs considerably in favour of granting permission.
"However, adverse environmental impacts and the harm to the setting of heritage assets that I have identified would significantly and demonstrably outweigh the economic and social dimensions or benefits of the scheme.
"The proposal would therefore fail to contribute to the achievement of sustainable development."