A planning inspector has ruled that a Satmar synagogue built in a family home in Stamford Hill must be demolished.
Satmar leaders must also pay Hackney Council the costs of a public inquiry into the planning violation because the appeal was "unreasonable".
The Bethune Road property had been extended and converted without planning permission. Satmar Ltd was served with an enforcement notice giving it three months to demolish the extension, which the council says was ignored.
Hackney disputes the synagogue's contention that the extension has been in place for 10 years.
Planning inspector Jean Russell was told the synagogue was also a family home, but concluded there was no "private flat" in the building and "the sole primary use was as a place of worship", with up to 50 people visiting on Shabbat. Singing and prayers could be heard by neighbours and the extension caused an "unacceptable loss of outlook and daylight" in neighbouring houses and gardens.
Awarding costs, Ms Russell said the appeal by the Satmar community was made "in the hope that the true information regarding the extension would not come out". Satmar Ltd is believed to be considering challenging the enforcement notice in court.
A Hackney spokesman explained that "the owners have six months to comply. Should they fail to do so, the council will prosecute them.
"For a challenge to a decision to be successful, the High Court would need to be satisfied that the inspector made an error in law. If a mistake has been made, and the High Court considers it might have affected the outcome of the appeal, it will return the case to the planning Inspectorate for reconsideration. The High Court would not make a decision itself."
