Andrew Bourne, of the Cross Keys, submitted a planning application to change the use of the property to a five-bedroom house. The pub ceased trading in May, and Bourne argued that the pub was no longer viable.
The Planning Inspectorate is the Government agency responsible for planning appeals.
Christopher Bowden, the planning inspector appoint-ed to handle the case, noted that Bourne focused on accounts for 2010 and 2011, supplemented by the first few months of 2012.
He said: “This seems a relatively brief period on the basis of which to judge the Cross Keys’ viability or otherwise as a public house after many years of trading.
“I note that the application for change of use to residential was submitted less than halfway through 2011 and nearly a year before the public house closed.”
Bowden added: “I am not persuaded that it has been demonstrated conclusively that the Cross Keys is unviable for public-house use.”
He also took into consideration that the property sits in the Cheyne Conservation Area.
Bowden noted that there had been a pub at the site for 300 years and that the outlet “contributes to the community’s view of the historic value of the asset as well as to its social value”.
Simon Clarke, of surveyors Morgan & Clarke, who acted on behalf of residents wanting to save the pub, said: “This was a classic case of a perfectly viable pub where there is no excuse to close it down.
“Clearly it is worth more as alternative use but that’s the case with all pubs. Just because it’s worth more as housing does not mean that it should close.”
A spokesman for the Royal Borough of Kensington and Chelsea, which is currently consulting on a new policy to save pubs from closure, said: “The loss of this historic pub to residential use would have been damaging to the area.”
The Publican’s Morning Advertiser was unable to get a comment from Bourne despite several attempts to contact him.