Squatters who have taken over a building in Montpelier might get to stay – after calling on its owner to scrap plans to reopen it as a shop.

People occupying the former charity shop on the corner of Ashley Road and Picton Street, known as the Magpie, have been told they may be able to remain on site but would have to pay rent.

Owner Nicholas Mifsud wanted to demolish the premises and build a new shop on the site, but his plans were turned down by councillors earlier this month.

After the decision was made, Mr Mifsud said he would refurbish the existing premises as they had permission for retail use.

However, he has now begun talks with the squatters and suggested charging them rent and allowing them to stay.

Oli Wells, director of Coexist, a Stokes Croft-based organisation which is supporting the use of the former shop as a community arts space, said it was a "win-win" situation.

The Magpie has been used by musicians and artists for the past three years and has an internet connection, a sound system, an iron-mongering workshop full of sculptures made on site, a sewing workshop and a piano.

Mr Wells said: "People are looking to take the Magpie to its next phase in its life and there are a lot of brilliant creative people in there.

"We have had a good conversation with the owner and he was open to the idea of them staying and paying their way, but at a cheap rate.

"Now we need people to step up and grab this opportunity with both hands."

He added: "The people who remain there will need to be better organised because at the moment it's a bit like anarchy. They may have to sell some art to take advantage of the retail use and help them pay the rent."

Squatter Sam Mickelson said talks with Mr Mifsud had been positive but argued that many of the people occupying the squat would be unable to pay rent.

He said: "We're on good terms with the owners. There is a dialogue and everyone is talking to each other like human beings. Mr Mifsud knows the building is being looked after. But a lot of people don't have any money – they are struggling artists and can't live off their art. It's going to be very difficult if someone starts asking for rent."

Mr Mifsud said: "We've had a positive meeting with them (the squatters) and they've got to come back to me with a proposal. They want to become a charity organisation and that would legitimise them.

"They are quite talented so there must be places where they can get grants or some sort of funding. But the shop idea isn't on the back burner yet – I'm just opening up all avenues for consideration."

Plans to turn the former charity shop into a new two-storey store were opposed by residents in Montpelier as well as the squatters earlier this month. They feared the premises would be turned into a mini-supermarket by one of the major chains and claimed the move would kill off small family-run shops in Picton Street.