The Longville Arms, at Longville in the Dale, has been shut since 2016, and the current owner had claimed the business was no longer viable.
But this was not accepted by the council’s southern planning committee at a meeting in February, when councillors said the pub was a previously thriving venue which had been “deliberately run down”.
The applicant appealed to the Planning Inspectorate, which has now granted permission for the conversion after judging it was unrealistic to think the loss-making business could be revived and sustained.
The pub, on the B4371 between Much Wenlock and Church Stretton, is registered as an asset of community value, but no bid was made to buy it within the designated time frame.
A report by planning inspector John Wilde said “strong evidence” was required to outweigh the impact its permanent loss would have to the quality of life within the community and the local economy.
Mr Wilde said he had visited the site and concluded it could not be sustained by the small number of houses nearby and would therefore need to become a “destination pub” to become viable.
The report said the pub had made a loss every year since the current owner took over in 2012, peaking at over £30,000 in 2016/17. The owner had also spent £70,000 on renovations, but said they would need to invest another £70,000 to bring it up to standard.
The pub has been up for sale since 2015 with an asking price of £395,000 but has received no interest, though the price had not been reduced during this time.
However Mr Wilde said a nearby pub also up for sale had reduced its asking price significantly and still not sold, indicating “that lowering the price of the appeal pub would not necessarily lead to its successful sale”.
His report concluded: “There are a number of factors therefore that lead towards the conclusion that the pub is no longer viable.
“These include that it could not rely on the local community in terms of numbers to make it economic to run; it would therefore need to be a destination pub.
“There are two other pubs within two to three miles either way on the same road as well as another one less than three miles to the north-west.
“Given their proximity and the relatively sparse population, I am not persuaded that all of these pubs could run at a profit, although I acknowledge that the Wenlock Edge pub is closed at present.
“To my mind therefore, taking into account my above reasoning, I consider that it has been adequately demonstrated that, on the balance of probability, the appeal pub is no longer a viable enterprise.”
Another application relating to the cottages next to the pub is subject to a separate appeal.