The derelict Morpeth Cottage Hospital is set to be converted into housing instead of a care village.
Helen McArdle Care bought the former hospital and surrounding land from Northumbria Healthcare NHS Foundation Trust last autumn and the company that runs the Foxton Court care home next to the site was looking to build various types of accommodation for up to 80 pensioners.
However, the 1.37-hectare site has now been sold to Galliford Try, subject to contract and the granting of planning permission.
Sara Holmes, development director with Galliford Try Partnerships North, said: “An application for the development of 39 homes – including four and five bedroomed houses and two bedroomed apartments – is expected to be lodged in the autumn.
“If successful, it will be built by our house-building division, Linden Homes.”
The cottage hospital has not been used since services transferred to the £18million Morpeth NHS Centre in spring 2013.
Last month, Helen McArdle Care submitted a prior notification application for demolition of the existing buildings at the site.
It was approved by Northumberland County Council officers this week. Works are expected to take up to 10 weeks to complete.
Morpeth town and county councillor for Kirkhill Andrew Tebbutt said: “I’m delighted it would appear that development will take place because we don’t want the site to be left derelict, but this news means it looks like the care village is not going ahead and that would be a bit disappointing.
“I am unable to comment on any specific plans until they are submitted.”