Costs have been awarded against a local authority that rejected plans to build five houses behind two existing properties.
Simon Harding, of Ibex Homes, lodged an appeal after an application relating to land at Langdown Lawn, Hythe, was turned down by the district council.
Now, a government appointed planning inspector has quashed the council's decision and approved the proposed development.
The original application was opposed by Hythe and Dibden Parish Council, which said the scheme was too big for the site.
Other objectors branded it backland development, saying it would result in existing residents losing some of their privacy. They also claimed that traffic generated by the new homes would affect air quality and road safety.
A report produced by council planning officers said the application should be given the go-ahead.
The report said the scheme made good use of land in an established built-up zone but would preserve the character and appearance of the area.
"The scheme has economic, environmental and social benefits that ensure delivery of a sustainable development, that also preserves highway safety and the amenity of neighbours."
However, members of the planning committee rejected the application.
A decision notice published by the authority a few days after the meeting said the "overdeveloped" scheme would result in a cramped environment.
A report produced by the planning inspector who heard the appeal said: "The council considers that the character and density of the proposed development differs from the surrounding area and that dwellings nearby generally front the street. However, this is generally not the case."
The report added: "The dwellings would occupy a modest proportion of the site.
"I therefore conclude that the proposed development would not unacceptably harm the character and appearance of the area."
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The report said the site was surrounded by homes but cited the "separation distance" created by large gardens.
"The position of the proposed dwellings would result in some loss of sunlight for the occupiers of ground floor flats at Fairview Close. However, this is likely only to be for a short period of time during the early morning.
"While the proposal would result in frequent vehicle movements, these are likely to be at regular times of the day.
"I therefore conclude that the proposed development would not unacceptably harm the living conditions of neighbouring occupiers with regard to outlook, sunlight, privacy, noise and disturbance."
The inspector said the council should pay the costs incurred by Ibex Homes in contesting the first of two reasons the authority gave for refusing the application.
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