The development was set to be in Lower Milntown, between the Glen Auldyn River and Glen Auldyn Meadows.
The plans were refused in May 2022, however the Braddan-based developer appealed against the decision.
Clare Barber MHK agreed with the planning committee’s recommendation to deny the appeal.
In the appeal request, a spokesperson for Dandara Homes said: ‘The reason for refusal fails to apply due weight to the provisions of the development plan and to the representations made by Isle of Man Government departments and agencies.’
Steven Stanley, interim chief officer at DEFA, said: ‘There would be material harm to the established character and appearance of this rural area.
‘Although mitigated to a large extent, there would also be harm to biodiversity and ecology interests.
‘These harms are not outweighed by the benefits of the development proposed.’
Dandara had originally applied for permission in September 2020, with 10 plots of land involved in the plans.
However, the planning committee had its concerns over the flood provisions and drainage systems, after which Dandara resubmitted the plans with revisions over the issues raised.
The plans were met with disapproval from many members of the public who submitted responses to the proposal, opposing the estate.
When the proposal was first considered then-MHK for Ayre and Michael Tim Baker said: ‘The position of the access to Lezayre Road creates a significant safety risk.
‘The single point of access to the development is inappropriate and inadequate for such a large development, particularly given its location on the TT course.’
He also cited environmental and flooding issues with the proposed site.
A spokesperson for Sulby-based Lezayre Commissioners said: ‘These fields at lower Milntown, Lezayre, are not the place to build a 138-home residential development. The Ramsey town boundary should not go any further west than the tree lined Glen Auldyn River.’
The application for this development was submitted at the same time as the Ramsey town board wanted to extend the town boundary.
The Lezayre spokesperson continued: ‘A satellite 138 -home residential development simply does not belong here.
‘Physically the site is not adjacent to the town of Ramsey.’
Ramsey Commissioners also objected to the proposal, saying in a consultation: ‘Concerns were raised that the sewage system would not cope with the additional volume of waste and lighting along the main road from the town boundary to the entrance of estate was inadequate.’