South Ulster Housing Association submitted proposals to the council to develop a four storey apartment block adjacent to a listed building and incorporating 15 apartments with provision only of cycle parking.
Plans were refused over the lack of amenity and partially because it fell below the minimum standard of space.
Green Party representative Mal O'Hara said: "I have previously raised concerns over the number of HMOs being built in this area and the resultant issues of overcrowding, parking and impacts on the character of the streetscape.
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"It is bad practice to grant more HMOs in an area that is already above 30% HMOs and this area is already well above that level.
"There is considerable need for housing in the area but that does not mean we can ignore the planning standards that have been put in place for good reason.
"I would congratulate the committee on their thorough engagement with residents, which included a site visit. It is an interesting development that the committee has overturned a decision made at Departmental level and it is welcome that these decisions are being made at a local level.
"I would urge developers to work closely with council officers and local residents to come up with appropriate solutions to deliver housing."
(CD)
