A development company has announced it is to make an investment of up to £5m at an historic site in Liskeard.

Sunnybanks Homes, based at Hatt near Saltash, has exchanged contracts on the purchase of Lamellion Hospital in Station Road, which was closed down in the lead up to the opening of the town's new community hospital in 2004.

The developers hope to complete the purchase from NHS Cornwall and Isles of Scilly by the end of the year.

The hospital, designed by John Foulston, was first opened in 1837 as the Union Workhouse under the Poor Law, and went on to become a geriatric hospital from 1948.

Sunnybanks is proposing a development of retirement bungalows and apartments for the over-55s. The two listed lodges at the front of the site will be restored and converted to bungalows.

The infirmary building itself will be retained and converted to a mixture of one-, two- and three-bedroom apartments. Some of the apartments will be available to purchase at reduced prices as an affordable homes. Twelve purpose-built three-bedroom bungalows are also proposed.

The intention is to provide a safe and secure environment with a gated access off Station Road and it is proposed that there will be no vehicular access off Marley Road.

Graham Clark, the company's planning director, said: 'The company has identified the former Lamellion Hospital as a perfect site for a retirement-type development.

'We are proposing to invest something like £5m in the site which, in our view, represents a major confidence boost for the town.

'As with all our other developments we are conscious of the need to work with residents, the town council and Cornwall Council to deliver a top quality scheme in accordance with our normal standards, given the importance of the site within the town and the conservation area.'