Plans for 14 homes in East Ilsley will not go ahead because the scheme includes no social housing.
The proposal would have included an unusual condition to secure six homes for local people, but councillors rejected West Berkshire's officers' recommendation to approve, saying villages arent socially sustainable without social housing.
Carolyn Culver (Green, Ridgeway) warned of recent sales by the housing association: "There are several social houses which have been sold by Sovereign recently."
She added: "If there are no social properties those people will be pushed out of the village."
"There should be at least three social homes according to our own policies," she said. "In Compton there are generations of people who lived there are now having to move away and we are not getting social housing back once they have been sold."
Sovereign has not agreed to replace the sold properties in the village, saying numbers would be maintained across the district.
Ms Culver also raised concerns about upkeep of public open space: "In Donnington Heights that open space has been left to rack and ruin," she said. She questioned who could use the proposed office space and whether it would suit a rural area: "Also, who is entitled to use the office space? How is an office with six home working office spaces useful for a rural area?"
"And £12k for a health care contribution will go to the ICB and not to Downlands practice," she added.
Lindsay Rigg, agent for Manor Oak Homes, said the development was a positive example of working with the parish council to shape house types so younger people can stay locally. The developer said homes for sale would be marketed to local people first.
For first sales each dwelling would be marketed to local people only for six months at a maximum price set by averaging two independent valuations. For subsequent sales the local-only period would be three months.
"How will that be achieved?" asked Tony Vickers, agreeing with the idea but questioning how it would be managed.
The parish council backed the plans without social housing, welcomed use of the shared office space and supported putting overgrown scrub land to use. The site is on Pan Meadows west of the High Street, once used for sheep markets and last grazed in 2023.
Objectors warned of wildlife loss and sewer problems: "These animals, like bats and tawny owls, have no voice in this meeting." They said raw sewage has flowed along the street in recent winters and argued: "For the past two winters raw sewage has been flowing along the street, and 14 more houses will mean seven per cent more homes and overload a system which is already struggling."
Concerns were also raised about the development being opposite a busy farm yard at Maxnet Farm, whose dryers and need for a turning circle were said to be overlooked. Two metre high sound barriers for the new homes was also suggested to reduce noise from the nearby A34.
Niki Hinman, Local Democracy Reporter
Bus Overcrowding Issues Resolved for Students
Candidates Revealed for Caversham Heights By-Election
Thames Valley Secures Devolution Deal Support
