Up to 800 new homes could be built on the site of a former mental hospital.

The 36 acres of land north of Chichester city centre once housed the Graylingwell Hospital.

Developers Linden Homes and Downland have signed an agreement with national regeneration agency English Partnerships.

The agency is responsible for the regeneration of 96 former NHS hospital sites nationwide.

Preliminary plans for the site include renovating and preserving a Grade II listed farmhouse and a chapel on the site which dates from around 1890, providing leisure and sporting facilities, artists' studios, a gallery, offices and a restaurant.

Forty per cent of the homes will be designated as affordable.

The developers will have to apply to Chichester District Council for planning permission.

David Ashworth, area director for English Partnerships, said: "There will be significant community, leisure and commercial facilities and all homes will achieve net zero carbon standards.

"We are committed to ensuring that the development of Graylingwell will be a huge success and we will continue our close working relationship with Chichester District Council to ensure it meets community needs and aspirations."

He added: "We will ensure that the development retains the integrity of the site and protects its rich heritage while at the same time becoming a flagship for environmentally friendly and sustainable community development."

A full public consultation with local politicians, residents and key stakeholders will start soon.

Built between 1894 and 1901, Graylingwell Hospital was home to more than 1,000 patients with mental health problems before it shut down in 2001.

After it closed, much of its contents was auctioned off, including beds, hoists and a snooker table.

Other areas of Chichester which are earmarked for development include the Roussillon Royal Military Police barracks in Broyle Road.

One of seven Ministry of Defence sites which have been earmarked for a total of 7,000 new homes, its development is also being overseen by English Partnerships.

Last August, The Argus revealed that up to 500 new homes are planned for the barracks, at least half of which will be affordable.

The 17-acre site, to the north of the city, currently contains an Army careers information office, which will be relocated, and a training centre vacant since the Royal Military Police moved to Hampshire.

A planning application for the Graylingwell site is expected to be presented to the council this summer.

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