A bid to build flats on top of a special needs school, which was refused by the government’s planning inspectorate (PINS) three years ago, has re-emerged with Side By Side school as its applicant – despite it not yet owning the site.

The Agudas Israel Housing Association applied in 2011 to build 14 three and four-bed flats for strictly Orthodox families on the site of the old Avigdor School in Queen Elizabeth’s Walk, Stoke Newington, which closed down in 2004 through lack of demand.

Because the site has been earmarked by Hackney Council for school use, the housing association promised to give the land worth £2 million to Jewish special needs school Side By Side.

The school has been based in portacabins in an Upper Clapton playground for nearly a decade, and the council has unsuccessfully served several eviction notices.

The idea was to build flats on top of a school for 110 pupils aged two to 19. But planners at Hackney Council branded the part three, part four-storey building an “intrusive and discordant” development and refused it permission.

An appeal to the Secretary of State in 2012 was unsuccessful, with inspectors stating the development would have an adverse impact on its neighbours. It also cited fears it may never even be built, because the applicants would not promise that the flats’ occupation would be linked to provision of the school.

Now Side By Side school has submitted its own planning application, despite not owning the site, which is valued at around £2m.

Its planning agent, Iceni Projects, claim to have ironed out a few “design issues” from the plan – which is one storey higher and has four extra flats, now a mix of one, two and three-bedroom properties.

But nearby residents from Arbor Court, who live opposite the site, say it is too big, too cramped, and it will generate too much noise and traffic.

They have already complained about the noise coming from the 29 flats built in 2010 in Agudas Israel’s adjacent development in Avigdor Mews.

A spokesman for the developer working with the school, said: “First of all we need to buy the site, the selling of the flats will hopefully cover the majority of the building costs, although not all, building costs a fortune today.

“The local community needs such a school, it’s the only local institution for disabled children, who have Downs Syndrome and autism, we want a proper building for the children.”