Cornwall Road mansion Pineheath, the former home of the wealthy Indian Bomanji family, will not be listed by English Heritage.
It means that owner Jason Shaw will not have to apply for listed building consent in order to progress with plans to turn the 1890s house into 12 luxury apartments.
Earlier this month, Mr Shaw submitted a pre-planning application consultation document to Harrogate Borough Council (HBC) after being advised that restoring the mansion as a single dwelling was not commercially viable.
The Department of Culture and Media confirmed to the ‘Advertiser that the building would not be listed.
Mr Shaw said: “English Heritage found that the family , although of local interest, were not of national interest.
“I know the Duchy Residents Association believe the building is of national interest, but what English Heritage are saying is that the quality of the building is not sufficient to stand in the way of progress.
“I understand there will be a lot of people who are disappointed with this outcome.
“But I will reiterate, this is not about building a block of flats. I stand by everything I said. The turret will be an integral part of the future of this building as long as I own it.”
Dr Rosemary Carnaghan of the association said: “Not listing the building removed the obstacles that meant the owner of the house could not demolish it. I will be surprised if the facade is kept.”
HBC planning officers will consider the document in the coming weeks.