Plans to renovate one of Aylsham's most iconic buildings have been put on hold because of the recession.

John and Martine Spalding planned to convert the disused arm of Aylsham Watermill in to residential properties.

But Mrs Spalding said the delay in starting the development, caused by a legal battle over a piece of land adjoining the mill, meant they hadn't been able to finish the project.

Neighbours living near the listed building have become frustrated by the delay and say the once picturesque and much-loved part of Aylsham is now overgrown and the empty part of the watermill is run down.

Mrs Spalding said: 'When we bought the watermill we thought it was such a fabulous building and it would be wonderful to restore it and bring up the value of all the buildings around it. But in reality it has been a battle every step of the way.'

Mr and Mrs Spalding bought the empty water arm of the mill and the adjoining land arm, which had already been converted in to holiday flats, in 2004. They sold the flats as homes and converted the loft space in to a two-bedroom apartment.

They also intended to convert the empty section of the mill but were stalled by an application by local residents, backed by Aylsham Town Council, to designate a strip of riverside land in front of the building as a village green.

The residents argued the plot had been used for leisure by the people of Aylsham for generations and public access should to it should be maintained. But Mr and Mrs Spalding, who have fenced off the land, said they had been assured it belonged to the mill when they bought it.

A Government inspector rejected the village green application, saying the residents could not show 20 years continuous use of the plot.

Mrs Spalding said: 'We couldn't go ahead with the development until we had the outcome of the inquiry. Then the recession started and it was a massive risk for us to do it. If we could have done it straight away when the building costs were lower and it was easier to get funding, it would have been finished by now.'

Ann Dyball, who has lived in Mill Row for more than 14 years, said the watermill was now in a 'sad state' and the adjoining land was an 'overgrown disaster'. She said: 'The condition of it has deteriorated steadily over the last 14 years. Clearly we are desperate for some work to be done on the mill.'

David Harrison, who is a town, county and district councillor representing the Aylsham area, said: 'Aylsham is supposed to be the jewel in the crown of Broadland and the watermill should be the jewel in the crown of Aylsham. The view of the mill from the bridge is obstructed, the trees are overgrown, the whole thing is a mess. Either they need to finish it or sell it.'