Last year, councillors on Scarborough Council threw out a proposal from Artz Ltd to convert Harewood House at 47 West Street into House of Multiple Occupancy (HMO) after more than 70 people objected.
The council's planning committee refused the plans, saying the number of bedrooms should be reduced to at most 10, in line with a review into HMOs carried out by the council previously.
The refusal came despite the council's planning officers recommending that approval should be granted.
Earlier this year, the developer came back with a proposal to create three individual dwellings within the former care home which has now been approved by planning officers.
In an application to the borough council it stated that it had listened to the objectors.
It adds: "My client submitted a previous application for a HMO which was refused by the planning committee, despite the case officer and manager supporting the scheme.
"The applicant hopes the previous concerns of numerous residents have been addressed with the new submission for the property."
The Harewood House care home closed in 2017 and despite two auctions being held no buyer has yet been found to take over the property.
Ten people objected to the new plans, with three people writing letters of support. North Yorkshire Police and Environmental Health did not raise any concerns.
A report prepared by planning officers said that local residents were concerned that the proposal was a backdoor way to create a HMO.
It stated: "Of concern to a number of neighbours is the fact that once permitted to be used as C3 dwellings, the properties could then be used as C4 accommodation. In other words, the properties could be used as small shared houses of up to six unrelated individuals living together rather than as C3 (Dwelling Houses)."
Under permitted development rights the owner would not need planning permission to change the houses into accommodation.
To guard against this the permitted development right was removed by officers as part of the conditions when granting approval.