Plans to build 65 homes on land in Whitley Bay were thrown out by councillors who said the site was too small.
Councillors said that social landlord Places For People’s plans to build a four-storey block with 46 apartments and 16 houses would be an ‘over development’ of the site.
The land is the site of the former Coquet Park and Marine Park First School, which was demolished in 2004.
Places for People bought the site in 2007 but told councillors the land value still hadn’t reached what they had paid for it.
Coun John O’Shea said: “My view is that 65 homes is just too much, it is out of character with the area.”
Coun Paul Mason added: “This is just simply over development.”
Concerns about parking for the nearby Marine Park First School were raised.
Coun Sandra Graham said: “The parents think they can park anywhere they want.”
She added: “I am disappointed with Places for People.
“After all this time they should have come up with something better than this, especially in terms of affordable housing.”
Places for People’s proposals were for 17 per cent of the site to be affordable homes, not the 25 per cent the council asks developers for.
Residents had called on the council to ensure that the apartments weren’t used as holiday lets or rented on airbnb, if it was to grant permission.
Councillors voted seven to two to reject the plans.