In April, the council turned down the application by developer Hacer Developments to provide 20 social rent homes on a site which formed part of a wider local development plan housing allocation.
However, inspector Janine Townsley ruled against the authority, granting planning permission for the development at Ffynnonbedr Primary School, Bryn Road, Lampeter, and awarding full costs to the developer.
In its decision notice, the council stated that the density of the proposed development was too high and contradicted the anticipated density of its allocated sites schedule.
However, the inspector said that "the siting and design of the proposed development would not have a detrimental impact on the site or the surrounding area. For this reason, I conclude that the proposed density would not give rise to any harmful effects."
The council also argued that the proposed single tenure use was not acceptable on a site which had been designated to deliver a mixture of tenures.
However, the inspector said there is no requirement within Planning Policy Wales for mixed tenure sites.
"The requirement is for mixed tenure communities and I am satisfied that this proposal would achieve that objective," she said.
The decision notice by the council also stated that the development would provide insufficient car parking, despite no objections from the highways authority, and that the scheme would produce unacceptable levels of traffic.
"There is no evidence before me, however, to substantiate this position," the inspector concluded.
The developers argued that the school does not lend itself to conversion as it would not meet standards set down by its housing association partner and would not be financially viable.
The council’s decision notice stated that the proposals are contrary to the allocated sites schedule which says the redevelopment of the site should include the conversion of the building and that any loss of the old school building would have a negative impact on the heritage of the area.
Council officers agreed that it could not justify refusal on these grounds, and the inspector did not attach significant weight to the loss of the building in reaching her decision.
The inspector upheld a full award of costs against the council for not providing evidence to substantiate its reasons for refusal, amounting to unreasonable behaviour and unnecessary costs for the appellant.