An application to remove the Cosy Nook building in Port Erin from the registered buildings list has been knocked back by the government.
Port Erin Commissioners applied to have the protection scrapped to allow for a demolition and rebuild project- a move they felt would "best protect the interests of the rate payers".
In its application for de-registration, the commissioners said the buildings were in a poor state and contained asbestos.
The planning department said the building's protection status remains but the commissioners have launched an appeal which a spokesman said will give both parties time to find a "workable, cost effective" solution.
The commissioners previously planned to replace the existing buildings, which date back to the 1800s, with an Art Deco-style café- those plans have since been withdrawn.
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