The complex could have held hundreds of asylum seekers
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The owners of Caythorpe Court near Grantham, the former agricultural college, say they still intend to use the buildings for residential purposes.
The development is the subject of much local concern.
Fears that the owners, the Angel Group, intended to develop the site to house asylum seekers led to the formation of a local protest group.
Nearby residents claimed such a rural area would not be able to cope with a large influx of people.
Residential institution
More recently it had been rumoured the site could be used to house recovering drug addicts.
But the Angel Group have issued a statement saying they are continuing to assess the feasibility of developing it for houses and apartments.
They said they will soon be applying for planning permission.
Only if that is refused will they fall back on the present planning permission, which is for residential institutions, a spokesman said.