A North York Moors hotel is to be converted into flats following planning permission from the national park authority.

The Moorlands Hotel, in Castleton High Street, is to be replaced by seven new one- and two-bedroom flats and will retain the owners' attic living space.

Alan Abrahams and Val Knights-Gibbons, who own the hotel, said it was no longer a viable business and not well used by local people.

Two previous attempts to sell the business had failed because of this, and the only alternative was a conversion to flats.

The North York Moors National Park Authority commissioned an independent report into the viability of the business before officers recommended approval of the application.

Mr Abrahams said: "My partner and I are so relieved and would like to thank villagers for the support we have had. The business was proved not to be viable, and we also thank the planners as well, because they were very considerate and sympathetic to our problems."

He said nothing definite had been decided, but it was hoped to start work on the conversion in early spring.

He added: "The development will be a nice one and totally sympathetic with the village and the national park. Nobody knows the building or the area better than us, that's why we want to do it ourselves using local people."

Danby Group Parish Council had objected to the proposal, saying it would be a loss of a village amenity and could set a precedent that may lead to the loss of one or both of the remaining pubs to similar schemes. Councillors were also concerned that the scheme should include affordable homes for local people.

Coun Herbert Tindall, chairman, said he could understand the owners' predicament, but the loss of the hotel would be a blow.

He said: "They have worked hard to keep it going. Unfortunately, it's like a lot of country pubs these days, they are struggling. It's a process of elimination."

He added: "We think it's a loss, not only for the immediate community but for the national park as well, because it was quite popular for tourists and attracted them into the area with its outstanding views."