Plans to turn a former brewery into supported accommodation for people with complex mental health issues have been scrapped after the owner of the building backed out of negotiations following “overwhelming local objections”.

The Old Brewery in Portslade had been earmarked for the scheme, which would have been run by Darlington-based charity St John of God Hospitaller Services (SJOG).

Proposals sparked anger among residents and Portslade councillors, who raised several concerns including the suitability of the building for the intended use and the lack of consultation and engagement with the community.

Read more: Anger at plans to house drug users and people with other problems at former brewery

Two public meetings were held last week, which saw a huge turnout of residents who grilled representatives from Brighton and Hove City Council, SJOG and the NHS during the first meeting.

Representatives declined to attend the second meeting, which a spokesman from NHS Sussex said was due to “behaviours” at the first meeting “not in keeping” with their values.

Now, Peker Holding, the company that owns the building in South Street, which is also known as Le Carbone, has decided to withdraw from further negotiations with SJOG, putting an end to the plans.

“Having taken into account the overwhelming local objections and specifically those of residents at the Old Brewery, to the letting of 37 new build apartments at the Old Brewery in Portslade to SJOG, we have decided to withdraw from further negotiations with SJOG,” said Niyazi Albay, CEO of Peker Holding.

Mr Albay said SJOG had “failed to set out exactly who the residents of the flats will be, the level of care that those residents would require and most importantly the impact on the local community” and said the company was “as much in the dark as everyone else was”.

He added that no lease had been signed, nor any agreement made with the charity.

“We were adamant that we would not enter into any contractual relationship with SJOG until such a time as they carried out a detailed consultation with the local community and had their support,” he said.

“Our primary responsibility is to the current occupiers of the Old Brewery, and we remain focused on ensuring that the development, once completed, will be of the highest standard.

“We are pleased that this chapter is now closed and that we can now concentrate on completing and delivering an iconic development in Portslade.”

Read more: NHS explains plan to house people with mental health issues at former brewery

A spokesman for NHS Sussex said it will now work with those involved to “consider the next steps” to ensure that the needs of service users are “supported”.

“We were made aware that community meetings had been organised and we offered to attend to provide information about the new service and answer questions,” said the spokesman.

“We are always keen to listen to our communities and anyone who has concerns about local services, however there were behaviours at the meeting we joined not in keeping with our values.

“We are committed to continuing to engage with people, partners and stakeholders, and will make sure there is appropriate time for this when we have considered the next steps.

“Our priority is, and has always been, to provide care and support to help those people who have a mental illness and who are already living in our local community.

“We understand that both St John of God Hospitaller Services and the property developer now no longer wish to continue with their plans, and so we need to work with all involved to consider the next steps so we can ensure that the needs of these residents within our community are supported.

 “In the meantime, they will continue to stay at their current accommodation, and we would like to thank Brighton Housing Trust Sussex and Sanctuary Housing for their ongoing support to their residents and their staff.”

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Councillors in Portslade who had campaigned for a full consultation to be carried out on the plan, and who met with Peker Holding to discuss the situation, said the decision was a “victory for common sense”.

South Portslade councillor Les Hamilton said: “The complete lack of prior warning or local consultation was a massive mistake which has rebounded badly on the commissioners and SJOG.”

Fellow South Portslade councillor Alan Robins said: “We tried to be as fair as possible to those involved in this, but it was clear that no real thought had been given to how it would work or how local people could be brought onside with the proposals.”

North Portslade councillor Peter Atkinson said: “This is a victory for common sense and local people.

“They made their views clear at the two public meetings. It was not bigotry or prejudice against people with mental health problems.

“But it was more about the manner in which they felt that they were being taken for granted.”