A leading Camden councillor has said he is “frustrated” the council is powerless to stop applications to demolish the much-loved Athlone House because of a loophole in the law.

Labour councillor Phil Jones, cabinet member for transport, sustainability and planning, hit back at claims that the local authority has been “feckless” in its dealings with the owner of the 19th-century mansion on the edge of Hampstead Heath.

The owners plan to knock down Athlone House and rebuild it as an eight-bedroom luxury home even though they are obligated under an historic planning agreement to restore the former NHS hospital and RAF intelligence base.

But the council has been unable to enforce the agreement because there has been a planning application or appeal relating to Athlone House ever since the agreement was made.

“It gets my goat that the developers are playing this game,” Cllr Jones said.

“I can completely understand how the campaigners feel and if we had the opportunity to enforce the restoration, we would do so immediately. It’s incredibly frustrating. I believe it demonstrates a loophole in the law that needs to be closed.”

More than 4,500 campaigners have signed a petition to save Athlone House from demolition and around 3,500 wrote to Camden Council about the proposals before the public consultation closed on Friday.

The fight to protect the 150-year-old building has even won the support of Monty Python legend and film director Terry Gilliam.

As a condition of building Caenwood Court, a multi-million pound housing development in the grounds of Athlone House, in 2004, the owners were bound by law to refurbish the derelict Victorian mansion.

The obligation, called a section 106 agreement, required the owners to restore the house within 42 months of building works at Caenwood Court.

But a council spokesman says that a legal loophole means it would be “almost impossible” to convince a court to carry out enforcement action while a planning application for Athlone House is being considered.

Cllr Jones wants the council to be granted the power to enforce outstanding planning obligations.

“I can assure residents that the council shares their ongoing concerns as this is a really important site and we have long fought to preserve it,” he said.

“I think local authorities should have the power to enforce section 106 agreements, but how that is changed is something we need to explore further.”

In a letter to the council, carer Claire McArthur, 50, who has lived close to Hampstead Heath all her life and recently moved from Highgate to Crouch End, said: “It is deeply concerning to me that Camden Council has been so feckless in dealing with this developer and holding to personal account those who make agreements with them.

“You have severely let down not just the residents of Camden and the surrounding boroughs but all those residents of London who enjoy the Heath and those to whom preservation of our historic buildings matter.”

The council has carried out nine maintenance checks since 2009 to make sure Athlone House is wind and water tight and is not falling into further disrepair.

An Athlone House spokesman said: “It is unrealistic to expect the new owner to implement the existing planning consent given the very poor condition of the building and the need to provide a very high quality living environment.

“The Planning Inspector accepted this reality and concluded that a new house would be acceptable subject to a high standard of design, which we believe [architect] Robert Adam has produced.”