The Maltings, a block of 100 single-person flats in Hill Road South, Penwortham, was flattened in 2013 after falling into disrepair and becoming a hot-spot for anti-social behaviour.
Now it has been announced that the Homes and Communities Agency (HCA) has bought the site, and hopes to build up to 60 homes on it.
The HCA confirmed it had bought the site to put starter homes on, under the government’s starter homes programme.
They said the proposals were subject to planning permission, and said there would be a full, formal planning process with local consultation.
The HCA said, if permission was granted, up to 60 starter homes would be built on site, for people under the age of 40.
But local residents have expressed disappointment at the plans for the site.
One neighbour said: “This proposal is rather disappointing because we, the residents, were hoping for some over 55s facilities to help keep locals in the area. This would enable current householders to downsize while remaining in the area and releasing their larger, under-occupied properties for families - which in turn would make first-time buyers.”
But council leaders have welcomed the move to build starter homes on the site.
Coun Michael Green, South Ribble Council’s cabinet member for Housing and Healthy Communities, said the site had an “unfortunate history”.
He said: “We are now pleased the HCA is involved and we are able to bring this forward as starter accommodation for people particularly in the Penwortham area, so it’s very much to be welcomed.”
Addressing residents’ concerns, he said the starter homes scheme was generally for people under 40, but said: “We have brought forward a housing framework at South Ribble Council and, as part of that, we are looking at provision for older people in terms of extra care housing and bungalows.
“As part of that, we have put forward £3m into the budget to kick-start those initiatives and to provide the types of housing people need.”