Phene Arms, Chelsea, saved from closure

The Planning Inspectorate is the Government agency that is responsible for planning appeals.

The RAB Trust, which owns the Phene, said the pub was no longer viable.

Two sets of accounts were disclosed in the case, with full-year figures showing that the pub had a turnover of £1.4m for the year ended December 2011.

However, with the cost of sales, overheads, depreciation and other charges, it said that it made a loss of £221,741.

A second set of figures showed that, if the pub was run in a different way, it would make a loss of £26,698.

The Royal Borough of Kensington and Chelsea disagreed with the figures, noting that depreciation should not be taken into account, given guidance by the Royal Institution of Chartered Surveyors.

Planning inspector Robert Marshall noted that viability could have been tested through marketing the pub. He wrote: “While I appreciate the caveats to such exercises they do give a useful indication on viability in cases such as this.

“The fact no such exercise has been undertaken is a further indication that the appellant has not made his case on viability.”

Marshall also pointed to the fact that the proposed development would “detract from the character of the surrounding area” because it is set in a conservation area.

Surveyor David Morgan, of Morgan & Clarke, which acted on behalf of the local authority, said: “Because of the escalating residential values in central London, there have been a number of recent ‘opportunities’ seized on by developers to buy up pub  stock, declare pubs non-viable and go for change of use to residential.

“The Phene decision has now put a stop to that headlong destruction of iconic London pubs.”

Trevor Watson, director of valuations at Davis Coffer Lyons, acted for RAB Trust. “The outcome is disappointing,” he said. “Residents chose not to frequent the pub and complain about noise, so it is frustrating to go for change of use, then have residents wanting the pub preserved.”

A Council spokesman added: “The planning committee refused planning permission for the conversion of the Phene Arms to a dwelling on 6 March 2012 based primarily on the impact of the change of use on the character of the conservation area.

"The Council’s decision was upheld, and the appeal dismissed on 16 January 2013 with the inspector concluding that the change of use would cause harm to the character of the surrounding area which includes the Cheyne Conservation Area.”