The NatWest in Market Place has been closed since January 2020, with the national bank moving to The Oracle.
The building owners Eurospeak Academy want to convert it into 15 apartments above ground, with a retail unit at ground level.
Of the 15 units, 10 will two-bedroom, four will be one-bedroom flats, with one three-bedroom apartment also being provided.
However, the project cannot go ahead just yet as no affordable housing would be provided, which Reading Borough councillors on its planning applications committee wanted to push for.
Social housing providers Paragon Asra, Metropolitan Thames Valley and Home Group all rejected requests by Eurospeak Academy to manage two affordable rental flats as part of the development.
But Micky Leng, the lead councillor for planning and assets, suggested that the council’s housing department could manage affordable rental properties itself.
Councillor Leng (Labour, Whitley) said: “We have a finite amount of land in this town, and we should look to improve our stock levels at all times and get as much affordable housing even if it is in twos and threes.
“If it is around management, is it easier to manage a housing register of 5,000 and manage homelessness, as it is to manage maybe three on-site affordable homes for rent?
“If Reading Borough Council is a registered provider are to turn it down then this committee and the public should know the reasons why they turn it down.”
Cllr James Moore “completely agreed” with delaying the approval of the project to see whether an affordable housing provider could be secured.
Cllr Moore (Liberal Democrats, Tilehurst) said: “I thought the lack of affordable housing is really disappointing.
“Apart from that, the whole application is welcome, and the housing mix is good.
“This is a place that has been vacant now for four years, so actually to bring that back into use, especially in Market Place, which is so visible, and to keep the ground floor as a commercial place so a new business could take part.
“Affordable housing aside, I think this is a really good use of the site.”
Meanwhile, cllr Karen Rowland (Labour, Abbey) raised concerns about how waste would be collected.
Cllr Rowland said: “That section of space really needs to be paid attention to, and it does not need to be a dumping ground, as it’s right off our Forbury Gardens.”
Therefore, she asked that developers provide more clarity on how waste will be collected and how the refuse stores for the 15 apartments would be arranged.
Councillors unanimously agreed to defer a decision on the application on Wednesday, May 29.
You can view the project by typing references 230626 and 230627 into the council’s planning portal.
The address, 13-16 Market Place, is Grade II listed as it dates back to the mid-1800s and its striking Bath stone facade.