The former 17th-century coaching inn has been derelict since a fire more than a decade ago in February 2014.
The building was finally sold in October 2023 after several failed attempts to find a new owner.
Plans to convert the original grade II listed building, and buildings added during the 18th, 19th and 20th centuries, into nine properties were submitted in March last year.
The proposal would also see five small homes built on the site.
Revised plans were drawn up by the developers after concerns were raised about how the listed building would be divided up for the new homes.
But in her response to the new plans, Anne Sims, the council’s environment and design manager for heritage, said there had been very little change to the layout of the listed building in the new designs, with only slight changes to the position of showers and baths.
She added: “The splitting of the listed building in this manner was not discussed prior to the application being submitted.
“There appears to be too many subdivisions proposed that would result in a loss of understanding of the listed building and how it has developed.
“There are many units proposed which each have kitchens and multiple bathroom facilities and would require new pipework, vents and flues for each unit.”
The officer said the “cumulation of domestic paraphernalia as well as confusing subdivision of each building” would have a harmful impact on the architectural and historic interest of the listed building.
The officer added that the proportions were still incorrect on the design for three new properties planned for the front of the site.
“This results in new structures that fail to sit comfortably with the rest of the site and would not be appropriate within the setting of the listed building,” she added.
Substantial changes to the plans would be required to make the redevelopment acceptable from a heritage perspective, the officer says, although she adds that the level of harm was still assessed as “less than substantial” meaning the concerns could be approved if the scheme was deemed to be in the public benefit.
North Yorkshire Council is expected to make a decision on the scheme later this year.