Historic England has submitted its initial response to plans to redevelop Norris Castle and its estate in East Cowes, saying it 'strongly objects.'
The organisation says the scheme would 'severely impact' the Grade I listed castle and its estate, bordering Osborne on one side and Springhill on the other and running down to the Esplanade.
A formal response from Historic England will be delivered before plans for the estate are considered by the Isle of Wight Council.
Historic England has described the castle, used by Queen Victoria and Kaiser Wilhelm, as of outstanding importance set in 'particularly beautiful and unusually well-preserved picturesque ensemble of house, landscape and ancillary buildings.'
The plan is to convert the castle into a luxury hotel, its fortified farm into a spa and to add houses in the grounds and on land between the estate and Springhill.
The castle, estate and other listed buildings are in a state of disrepair, after 'decades of neglect as a private residence', and developers say they have worked to limit further deterioration.
All three of the estate's Grade I listed assets are now on Historic England's 'Heritage at Risk' register because of urgent need for repair.
Earlier this month, East Cowes Town Council branded the scheme a 'millionaires' playground' and unanimously voted to object to the proposal for a luxury, five-star hotel, housing and retirement village.
The Isle of Wight Council is continuing to accept comments.
Historic England said the plans would mean 'a very high degree of harm' and warned it was likely to submit a formal objection.
It will consult with the Historic England Advisory Committee will on the viability of the scheme before handing a formal response to the Isle of Wight Council.
Richard Peats, Development Advice Team Leader, Historic England, said:"Norris Castle is a hidden gem. The striking mock castle, its farm disguised as a fort, and many other historic features all set in idyllic parkland have hardly changed since they were built over 200 years ago.
"While this application includes urgently needed repairs it also involves a great deal of new development which would destroy much of what is special about the estate.
"Historic England is keen to find a sustainable future for the estate but the proposed scheme is not the right approach, nor the only way to save the Castle. The Isle of Wight’s only Grade I listed landscape deserves a better future than this.”
The castle and farm date to around 1800, and were designed by James Wyatt, one of the leading architects of the day.
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