Plans to covert a guest house in Falmouth's Kimberley Park Road into student accommodation have won the backing of town councillors who were told the business will be handed over to the banks if the scheme is rejected.

Sky Blue Properties are behind a planning application seeking a change of use of the Park View Townhouse which would result in the creation of 24 student beds. The property's owner, Paul Smythe, told councillors last week that the guest house has been on the market for nine of the last ten years and now owes its directors over £100,000.

"If it remains unsold the property will be handed over to the banks by the end of this year," he said. "Tourists want to be nearer to the beaches. We cannot compete, it has to go."

Stefan Klimek, of Sky Blue Properties, said: "Accommodating students does not have to be a problem. Problems arise when you have absentee landlords and a lack of management. We already own several blocks of a similar size in Market Street, Killigrew Street and Church Street.

"Park View has reached the end of its natural guest house life. A well managed HMO of 24 is far more effective that trying to manage five to six family homes dotted around Falmouth."

The town council's planning committee agreed to support the application claiming the site is in a sustainable and busy location and the new use would take pressure off the family home market, but members want the new student accommodation to have 24 hour management cover by the applicant.

Councillor Oliver Cramp said: "I think this is to be welcomed. The organisation putting it up have been around for a long time and have a very good name for good management. We have a large building that urgently needs looking after and making proper use of. This will be putting the building to a good use and takes a little more pressure off family homes."