The application was deferred at the meeting on September 24 for a site inspection and the reason for refusal was a lack of amenity space.
The former chapel, which is grade II listed, has not been used as a place of worship for a considerable period of time.
It is proposed to convert the existing building over three floors into nine, separate one-bedroomed apartments, three of which will be allocated for affordable housing.
Welsh Water raised no objection.
Herefordshire Council's traffic manager raised no objection subject to cycle storage being included.
Herefordshire Council's public rights of way manager raised no objection, saying the development does not encroach on public footpath ZE27.
Herefordshire Council's planning ecologist raised no objection.
Herefordshire Council's conservation manager recommended approval, saying the scheme preserves and enhances the exterior of a building at risk.
Herefordshire Council's strategic housing manager supported the inclusion of three affordable units.
Herefordshire Council's property services manager said the site had been empty for a long time and some form of use for it was to be welcomed.
Kington Town Council were concerned at the lack of detail in the plans, lack of amenity land and the possible intrusion on existing residents of Harp Yard.
Eight letters of objection were received expressing concerns at the quality of the plans, the location of the proposed stair tower, the impact on the amenity of existing residents and insufficient car parking.