The sale of the derelict farmhouse made famous in the cult film Withnail and I has fallen through, its owners said today.

Sleddale Hall, near Shap, Cumbria, was bought from the water company United Utilities for £260,000 at an auction in February. Local businessman Sebastian Hindley made the winning bid and said he would use the site to showcase the natural beauty of the Lake District's eastern fells.

He was reportedly still trying to raise the amount needed to secure the property, but a United Utilities spokesman said: "We are sorry to say that the sale of Sleddale Hall has fallen through despite our best efforts."

The spokesman added: "This is a special house in a beautiful and sensitive location and a lot of people are interested in seeing its future assured, including us.

"At the moment United Utilities is considering its options with the best interests of the property in mind."

Hindley runs a pub in the village of Bampton, six miles from Sleddale Hall.

The farmhouse featured in key scenes in the 1987 comedy, which starred Richard E Grant and Paul McGann as down-on-their-luck actors.

In the film, the pair escape their squalid flat in Camden Town, north London, for an ill-fated weekend at the cottage of Withnail's uncle, Monty.

The visit prompted one of Withnail's often quoted lines: "We've gone on holiday by mistake."

The 18th-century Sleddale Hall has been vacant for many years and is almost two miles from the nearest public road and a mile from the closest inhabited house.

Bruce Robinson, the director of Withnail and I, used the farmhouse mainly for exterior shots.

The building contains many original features and the roof has recently been repaired.

It was built from stone and Lake District slate and was originally acquired by the Manchester Corporation in the 1920s as part of the land required to meet the city's growing need for drinking water.

The Manchester Corporation eventually became part of North West Water and then United Utilities.

Celebrities such as Kate Moss and Chris Evans were rumoured to have shown an interest in buying Sleddale Hall.