The long-neglected building gradually began to show its age, and slipped into decline - it screened its last film and closed, still making an operating profit, on 31st December 1977.
The demise of The Palace caused a major stir in Letchworth, and further afield, and the building lay dormant for several years. Plans were eventually submitted for shops and flats, in a pastiche style of Letchworth’s pitched roofs and gables, and the Palace was finally demolished in 1985. The site today is occupied by, amongst other things, a Blockbuster Video store.