A stone barn in the Lake District, which was the final studio of one of the 20th century’s most influential artists, could be moved to China if funding is not found to maintain it, its owners have said.

The Merz Barn in Langdale, Cumbria, was used by the German artist Kurt Schwitters, after he fled from the Nazis in 1940. The building became regarded as a pioneering piece of modernist art after Schwitters covered its walls in a distinctive collage of materials before his death in 1948.

While its wall of art was moved to the Hatton Gallery in Newcastle upon Tyne in the late 1960s, the barn is considered an important piece of the UK’s cultural heritage, with artists such as Damien Hirst, Antony Gormley and Bridget Riley all having made donations towards its upkeep.

The building’s owner, Littoral Arts Trust, has failed five times to secure funding from Arts Council England to maintain the building. Ian Hunter, the trust’s director, said on Sunday that, on the 70th anniversary of Schwitter’s death, it had been left with no choice but to put the building up for sale on the open market, where it is expected to reach about £350,000.

The charity said it had already received an approach from an unnamed Chinese multimillionaire art collector, who has offered to buy the barn outright and relocate it to their private collection in Shenzhen, southern China.

“It seems to us as though Arts Council North is intent upon forcing us to have to sell the Merz Barn on the commercial property market,” said Hunter.

“This is absolutely bonkers, given the public arts funding already invested in the project. The ‘good causes’ lottery ticket purchasers, and the taxpayer have the right to ask who at the Arts Council is behind these incompetent decisions, and why?”

An Arts Council spokesperson said: “The Arts Council’s role does not include protection and restoration of cultural heritage – this is the responsibility of other bodies. However, we have supported Littoral Arts with funding for a contemporary programme over a number of years.”

The Lake District was recently granted world heritage status by Unesco and the Merz Barn was included in the submission as one of its most culturally significant sites.

Arts Council England withdrew funding for its maintenance and restoration in 2011. Hunter, 70, and Celia Larner, 80, who together run Littoral Arts Trust, have since used their savings, pensions and proceeds from the sale of one of their houses to keep it going. Hunter previously offered the building as a donation to the Tate and the Museum of Modern Art in New York, but both declined.