PLANS for a £25 million transformation of St Leonard's Place into residential dwellings have been welcomed by neighbouring organisations and historians.

The Press yesterday revealed that earlier plans for a hotel on the site of the former council offices had been scrapped in favour of a scheme to create 40 homes made out of town houses, mews houses and apartments.

The regeneration of the Grade II-listed building by property investment firm Rushbond is set to get underway by March next year, if approved by City of York Council's planning authority in November.

The work will coincide with the £4.1 million redevelopment over the road at York Theatre Royal.

Liz Wilson, chief executive of the theatre, said: "We are really pleased with the idea behind bringing the building back into residential use.

"It's great to have people living in the city as it really changes the character of a city centre when people reside in it.

"We are very excited about the plans and hope they are approved. The last thing we want is to be reopening our newly regenerated theatre with the crescent opposite looking like it does now.

"We will be working with the developers to ensure while work on both sites is carried out we don't look like a giant site of hoardings, and will be coming up with some creative solutions to avoid that."

Janet Barnes, chief executive of York Museums Trust, which runs another of St Leonard's Place's neighbours York Art Gallery, said: "The proposed plans for St Leonard's Place will breathe new life into this fantastic crescent and it seems fitting that they should once again be homes.

"We believe the plans will enhance even further an area of York which is seeing much investment in the coming year, with the major developments at York Art Gallery and York Theatre Royal and the proposed changes to Exhibition Square."

The St Leonard's Place building, which was built in 1831 as nine town houses, will become five townhouses and 29 apartments, and a mix of six conversion and new build mews properties are planned for the rear of the main crescent.

June Hargreaves, a trustee of York Civic Trust, who worked from the building when she was part of York City Council's planning office, said: "I'm disappointed every time I pass that grubby looking build that nothing has been done to it yet, so I welcome these plans.

"From a Civic Trust point of view we will be pleased to see the building back in use, but it is important that any changes made recognised the historical importance of restoring it to what it should be."