A decision over whether a five-storey block of flats should be built on the site of a former women’s hostel has been referred to the planning inspector.

Southern Housing Group, a housing association, wants to demolish Ada Lewis House on Dalmeny Avenue in Holloway and replace it with 45 flats.

Islington Council said it would have refused the application on the grounds that it does not include enough affordable housing. It was waiting to hear back from the developer on the concerns when an appeal was lodged with the planning inspector as the deadline for a decision on the application had passed.

Under a quarter (21 per cent) of the flats would be offered up as rented or shared ownership for those who cannot afford to buy privately, according to the current plans.

The town hall said it expects to see at least 50pc of the flats designated for this purpose for any application and nearer to 100pc if the application is from a housing association.

But the group said its proposals are in line with government guidelines.

This is the second time in recent years a major planning decision in Islington has been taken out of the hands of the council.

In February, the local authority lost its appeal against plans to demolish the Good Intent pub in Wedmore Street, Holloway, and erect upmarket homes following a referral to the government inspector.

Ward councillor for St George’s, Tracy Ismail, said the decision should remain within the community.

“This takes the decision out of the hands of the local community and into the hands of an anonymous planning inspector,” she said.

“If Ada Lewis gets approved what if there is a judicial review? How much will that cost the council?”

In 2010, residents of the 80-room block were told they would have to leave the building to make way for redevelopment and the property has been empty ever since.

The hostel dates back to 1913 and was funded by Ada Lewis, a wealthy Jewish philanthropist, who was concerned about the lack of decent housing for single low-waged working women.

A spokeswoman for Islington Council said: “We told Southern Housing that we had major concerns with their plans, especially the low level of affordable housing.

“We told them unless they came back with more affordable housing, we would refuse the application. Rather than coming back to us with better plans, they went over our heads by appealing it straight away.

“This planning application would not have come to planning committee as it was going to be refused. Planning applications that are refused by officers do not go to committee.”

Group development director at Southern Housing, Dale Meredith, said: “We are keen to move forward with our plans and eagerly await a decision being made on our latest submission. This has reduced the number of homes following extensive discussions with the council and uses the industry standard method of calculating the maximum viable level of affordable housing.

“Islington Council failed to determine our application within the required time frame so it has been referred to the planning inspector.”