The new property planned in Ashton-in-Makerfield would have featured two en-suites, three walk-in wardrobes and a games room over two storeys.
The dwelling was intended to accommodate two families under one roof.
But the bungalow in Bowland Avenue cannot be demolished for now, Wigan Council’s planning committee ruled, after 25 residents objected to the plans.
Speaking on behalf of neighbours, including his own family, Frank Gore told the committee the new house would be "incongruent" with the rest of the street.
He said: “The planned design does not fit with the surrounding neighbourhood.
“It is, in fact, of a significantly different design and much larger than all other properties.
“Obviously, over the years, many houses on the estate have been adapted and changed, but the large majority have done so within their original footprint and are reflective of the size and design of other houses in the estate.”
The Winstanley family bought the house in November 2020 after the "untimely death" of the previous owner.
Representing the family, Graham Thorpe from PWA Planning said sleeping arrangements have been "somewhat undesirable" since moving in together.
He argued that the planning application should be approved because the new house would be no taller than the pair of semi-detached dwellings next door.
He said: “Although the proposal is for a larger dwelling than currently sits on site, the proposal will allow my client to house their conjoined families within one sole unit instead of having to potentially split their family.”
The planning agent told councillors the price of buying a larger house "hugely exceeds" the family’s budget and, after considering extending the bungalow, builders said the only feasible solution is to demolish it and start again.
However, some councillors questioned why the family requires five bathrooms.
Despite the family paying the council for pre-application advice, planning officers claimed that the applicant did not follow all of the advice given – although their representative said the scale of the proposal was reduced.
One councillor compared the proposed property to a "hotel" and raised concerns that it could be turned into a house in multiple occupation.
Planning vice-chair Sue Greensmith, who said it was a "difficult" decision, agreed with officers who recommended that the application is refused.
But Labour councillor John Harding, who described the street as the most "higgledy-piggledy" he had ever seen, suggested approving the application.
However the blueprint was rejected with eight members voting to refuse permission.
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