Applicant Zubeir Mister wants to turn the former offices at St Michael's House in Parkgate Drive, Lancaster, into 14-bedroom visitor accommodation.
Any work on the site would also need listed building consent.
The property is within the Standen Park development off Wyresdale Road, where the County Lunatic Asylum was once housed.
In 1997 the building was purchased by The Buildings Renaissance Trust and permission was granted for a mixed scheme which saw the nave retained as largely open plan workspace with offices and the remainder of the footprint transepts and chancel forming two dwellings.
The workspace has been unused since 2006 despite marketing attempts and was eventually put up for auction in 2010, but bids did not reach the reserve on the day.
Mr Mister bought the property directly from the administrator’s post-auction in July 2010 and has himself sought a tenant to operate within the restrictive planning approval without success.
The applicant commissioned a scheme for conversion to residential use and requested pre-application advice from Lancaster City Council's planning department, and a response from the assistant conservation officer in 2010 was “not entirely supportive” of residential as an alternative use.
Many Standen Park residents have objected to the plans, saying they are not in-keeping with the area, and would lead to excess traffic on the private estate's narrow road.
"The community of Standen Park is single-family owned housing where the owners maintain a high standard of appearance and a quiet, cooperative community," one resident said. "This application would add something out of keeping with that."
Speaking on behalf of several concerned residents, another said: "This seems to be a very optimistic proposal!" and added that it was light on detail and could potentially be describing a hostel. In particular they highlighted a lack of kitchen facilities outlined in the proposals.
Another resident said: "This is a quite preposterous and audacious move. I'm shocked it's even being attempted.
"Essentially shoehorning a 14 bedroom 'hotel' into a listed building without any suggestion about parking, provision of food, any concern about disrupting the feel of the local residential area, bringing innumerable, potentially ever changing groups of people into this quiet, family community.
"The building does not lend itself to this kind of drastic transformation and there is no mitigation for the tremendous impact it would have on the local community.
"How has a listed building been allowed to decline in such a manner without the local responsible authorities taking action?"
A further resident added that the extra road usage would "create more wear and tear to our privately maintained access," and asked "will the developer pay 14 times what we have to for the upkeep of the area?
"The facilities on the estate are paid for by the residents, who/how will the developers police the use of our private facilities when they are inviting starters who do not contribute to them?
"Who will pay for any damages caused by these 'visitors' who have no vested interest in maintaining the historic site?
"The building has historical importance and should be protected by Lancaster council. It should not be changed in such a way that will have a detrimental impact on the historical site.”