Determined campaigners frustrated by the lack of action to restore historic Athlone House in Highgate are appealing to potential buyers to consider turning the property into a boutique hotel.

The future of the 1870 mansion, which sits on the edge of Hampstead Heath, currently hangs in the balance after the Planning Inspectorate said the house could, potentially, be demolished if high quality plans were submitted in future.

Members of the Athlone House Working Group, made up of key members of the Highgate Society and the Heath and Hampstead Society, say they are now exploring ideas to rescue the property themselves, 10 months after a pre-planning application meeting at Camden Council failed to solve the dilemma.

Michael Hammerson, of the Highgate Society, said: “It could be the best five-star boutique hotel in London.

“We’re planning on hunting around to see if any hotel companies would be prepared to put in a realistic bid to buy it and talk to us about what we consider appropriate in terms of any extension.

“We would like any potential buyers to come forward.

“There aren’t any hotels in Highgate. Because of its location and because of the nature of the building, it would make a superb hotel and ensure public access.”

Athlone House, which is thought to be owned by a foreign billionaire, was built in 1872 for Edward Brooke, a wealthy entrepreneur from Manchester. In 1942, it was taken for war service and housed the Royal Air Force Intelligence School.

In 2010, a planning application by the owners to demolish the building was rejected by Camden Council and later by the Planning Inspectorate.

Chloe Berman, news editor for industry magazine Travel Weekly, said the area was lacking choice in terms of high-end hotel accommodation, and welcomed the idea for Athlone House.

She said: “Turning Athlone House into a boutique hotel would be very positive for an area which is sorely lacking in quality independent hotels.

“The building’s fascinating history and character – as long as it is tastefully restored – is just what modern travellers are looking for, in contrast to bland chain properties.

“Such a hotel would help put the Highgate and Hampstead area on the map as a place to stay, rather than simply visit for the day.”

But Lorenzo Stella, owner of La Gaffe hotel and restaurant in Hampstead Village, said it was an unrealistic business idea.

He said: “Whoever was to take it over would have to consider the cost of renovating the property and then turning it into a boutique hotel, against what they could actually generate as a business.

“Realistically, anyone looking at it from that point of view would see it’s not worth it.”

Tony Hillier, chair of the Heath and Hampstead Society, said he was open to the Victorian house being turned into a hotel provided it did not ruin the view from the Heath.

He said: “We don’t mind what it would be used as, our concern is what it looks like from the Heathside and its size.

‘‘If it was modern with an appropriate design and not substantially increased, we would support that. It would be a great shame if something hideous and large was built.”

* Click the link on the right hand side of the page for local reaction to the hotel plan