Developer Renew Land Developments had appealed against the decision of Cheshire East Council to refuse its application for the homes at Barthomley, Crewe.
In his report, inspector David Rose said that one of the key issues of the appeal was whether the council could demonstrate a five-year housing land supply as required by national planning policy.
The report said that the council - which adopted its local plan in July - claimed it could demonstrate a 5.45 year supply, while the appellant argued it was in fact 4.65 years.
Rose concluded that the council’s five-year housing supply "should be considered to be marginal and, potentially, in doubt".
"I conclude that it would be both cautious and prudent in the circumstances of this case to regard policies for the supply of housing to be considered not up-to-date, thus engaging the tilted balance of paragraph 14 of the National Planning Policy Framework (NPPF)", he said.
Paragraph 14 of the NPPF says that "where relevant policies of the development plan are out-of-date, planning permission should be granted unless any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in the framework as a whole, or specific policies indicate development should be restricted".
Rose said that the benefits of the proposal "would flow from any contribution that it would make to the 5-year housing land supply".
But he said that, even if the scheme delivered 100 homes within five years, this contribution to overall housing supply would be "nominal and a factor of very little weight".
He added that, moreover, "the potential provision would be tainted by an excess, beyond the immediate five-year period, of up to 300 dwellings in conflict with the settlement hierarchy and spatial distribution of development" set out in the council’s adopted Cheshire East Local Plan Strategy (CELPS).
Rose said that the plans would conflict with policies in the CELPS regarding settlement hierarchy, spatial distribution of development and the protection of the open countryside.
This, he concluded, "provides the totality of the planning harm".
"The resultant conflict would, by itself, significantly and demonstrably outweigh the benefits of the proposed development. It follows that the proposal would not be sustainable development as defined in the Framework", he said.