Property developers PJ Livesey and Story Homes have secured a £67.8m contract from the Homes and Communities Agency (HCA) in the UK to develop Lancaster Moor Hospital site.
The Lancaster Moor Hospital building on Quernmore Road will be restored and 440 homes will be constructed on the 15.76ha site in the surrounding woodlands.
HCA had already secured outline planning permission for the new build homes and the conversion of the former hospital annexe and the adjoining Campbell House, into apartments and houses.
As per the deal, PJ Livesey will be responsible for carrying out the conversion work and securing building consent for the development.
Story Homes will be responsible for developing the masterplan for the whole site and constructing the majority of the new properties.
The site will incorporate existing parking, green space and mature woodland, which benefits from a Tree Preservation Order.
To prepare the site for the development of the new homes, HCA worked with Lancaster City Council in the UK and English Heritage.
HCA said that once the plans have been drawn up, a community consultation programme will be put in place to ensure the scheme meets the needs of local people.
HCA is investing £3m through its Accelerated Land Disposal Programme to support upgrades to the main access road, the demolition of outbuildings and asbestos removal.
Designed by architect Arnold Kershaw, Lancaster Moor was constructed in 1882 as an annexe to house mental health patients and was later used by the NHS before closing in 1999.
Story Homes managing director Steve Errington said, "As well as regenerating the area and bringing affordable/quality housing, the development will boost the local economy not only in terms of jobs but also in the procurement of materials and services from local companies."
Work is anticipated to start onsite by the end of November 2012.
Image: The Lancaster Moor Hospital building will be restored and 440 new homes will be built. Photo: Homes and Communities Agency.