An administrative blunder means the dilapidated mansion of Hackney’s Mole Man can still not be bulldozed, despite permission being granted to build two new homes there.

An appeal to the government’s planning inspectorate overturned Hackney Council’s decision in June to refuse planning permission for two new four-storey townhouses on the site of the home of deceased engineer William Lyttle.

Eccentric Mr Lyttle was dubbed the “Mole Man” because of his penchant for digging tunnels.

He gained worldwide notoriety after 40 years spent digging a 60ft network of tunnels beneath the �1million mansion, which is now the subject of a dangerous structure notice.

Mr Lyttle died last June, owing more than �400,000 to the council, which saved the building at the junction of Mortimer Road and Stamford Road from collapse after he was evicted in 2008.

‘Derelict’

The council wanted to see the building, which they regarded of “local townscape merit”, restored to its former glory.

But Andrew Fraser, who says he is acting on behalf of William Lyttle’s heirs, says this is not financially feasible and appealed against the refusal to build the houses on the site.

The planning inspector upheld his appeal in December, saying: “In its present seriously neglected and derelict condition, the building detracts materially from the character and appearance of the conservation area.”

But Mr Fraser still does not have permission to demolish the building because it lies within the De Beauvoir Conservation Area.

Mr Fraser – whose probate company Fraser and Fraser appeared on the BBC TV series Heirhunters – said his company had made a “fundamental error” in the appeal, which only related to the new proposed dwelling, and not the application for demolition of the existing building.

He confirmed he has submitted another demolition application and has also enlisted a barrister to look into whether the inspector was right in limiting his remit.

“We are quite hopeful. The main factors are the cost issue and the quickest way of getting this issue resolved,” said Mr Fraser.

He confirmed the site had now been taken off the property market where he was asking for offers in excess of �700,000. He said that if his firm got the full judgement , then the site would be sold with planning permission.