Development consortium Westcountry Land (Falmouth) Ltd, Falmouth Rugby Club, Westco, and Galliford Try had appealed against the decision of Cornwall Council to refuse its plans for the homes on the western edge of Falmouth.
According to inspector Nick Fagan’s report, the seven-hectare site had not been allocated for development in any existing or emerging local planning documents.
Fagan said that the key issue in the case was the "acknowledged importance" of a green gap between the built-up western edge of Falmouth and the separate village of Budock Water "and the extent to which the proposed development would or wouldn’t affect it".
Fagan concluded that the scheme "would significantly harm the landscape character and visual amenity of the area including by reducing the physical, visual and perceptual gap between Falmouth and Budock Water".
His decision letter said that "considerable weight" should be attached to the delivery of "a significant number of badly needed affordable homes".
The inspector said the development would also provide "on-site ecological landscape and ecology benefits as well as economic benefits to local businesses".
However, he added, the benefits "are insufficient to outweigh the harm to the local landscape, the harm to [a local listed building], the loss of best and most versatile agricultural land and the conflict with the plan-led system which indicates that such major housing development should be dealt with through [the emerging Cornwall Site Allocations Development Plan Document]".
Agreeing with the inspector’s recommendation for refusal, a letter issued on behalf of the housing secretary, James Brokenshire, said that the minister gave "significant weight to the intrusion of the proposed scheme into the landscape, including reducing the physical, visual and perceptual gap between Falmouth and Budock Water".
Brokenshire considered that the development "would fail to recognise the intrinsic character and beauty of the local countryside", the letter said.
It went on to say that he also "gives significant weight" to the harm of the proposal on nearby Grade II listed Menehay House, though it says the impact would be "less than substantial".
Earlier this month, Brokenshire refused two planning appeals, including a scheme for 150 homes and a business park, due to concerns about the proposals' impact on a nearby World Heritage Site.
The secretary of state also recently approved plans for a 1,100-home development on a brownfield site on the northern edge of York, after concluding that, amongst other factors weighing in favour of the scheme, it would enable the "positive and beneficial" reuse of the brownfield site.