WORK has started on a multi-million pound housing development in the grounds of a hospital.

Cumbria-based Story Homes has started construction of 240 new houses on a 31-acre site next to Shotley Bridge Hospital, in County Durham, bringing an end to a decade of speculation about the future of the site.

The first application for outline planning permission to build homes on surplus land at the site was submitted in 2002, following the decision to downgrade Shotley Bridge to community hospital status, and redundant buildings were demolished four years later.

However, the proposed development stalled and it was 2010 before an agreement was finally reached to sell the land for housebuilding and a detailed planning application was drawn up.

Now developers are finally pressing ahead with the £40m project, which they say will create around 75 new jobs, with the first homes expected to be available for sale in May.

The Woodlands development, scheduled to take place over the next seven years, includes nine five-bed houses, 94 four-bed houses, 59 three-bed houses, 66 two-bed houses and 12 apartments. Of those, around 60 will be classed as "affordable homes", around half of which will be offered for rent and half for sale at discounted prices.

Although the Carlisle-based company has carried out a number of developments in Cumbria, Lancashire and Scotland, it is its first venture in County Durham.

Chief executive Fred Story said: "The Shotley Bridge development is a really exciting new landmark for us".

He added: "The construction sector has been going through an incredibly tough period and nowhere more so than house building.

"But as a company we are demonstrating that if you maintain your standards and refuse to compromise on the service you provide to your customers, you can still succeed."

Coun Clive Robson, Durham County Council's cabinet member for housing, said: "This is an exciting time for Consett and the surrounding area, with a number of key developments taking off and I am delighted to see this one moving forward.

"I am particularly pleased to welcome the additional number of affordable homes which will make a significant contribution towards the council’s overall target for the county."