DEVELOPERS have unveiled £25 million housing plans for St Leonard's Place in York city-centre, after hotel plans for the site were scrapped.

The Grade II listed offices, which housed City of York Council until last year, are to become 40 homes, made up of four-storey town houses, mews houses and apartments.

Developer Rushbond says it aims to create a "stunning, high-quality residential development", on a par with the Royal Crescent in Bath and Grosvenor Square in London’s Belgravia.

The plans will return the building to its original purpose and the company's managing director Jonathan Maud said he expected interest from around the world.

Rushbond had secured planning permission to turn the building into an 88-bedroom hotel, but Ambiance Hotels dropped out of the plans for a £20 million four-star hotel, which would have created 80 to 100 jobs. Ambiance has since been unavailable for comment.

Mr Maud said: "After two years trying to get interest from a hotel company it was time to accept what the market was telling us; it wasn't going to work as a hotel.

"That's probably a combination of the fact hotel companies don't want the complexity of a sensitive project and lengthy conversion such as this when they can get a ready made hotel already in operation, coupled with the fact York already has a great hotel offering.

"We knew we had to bring this fabulous building back to life, and it was imperative that we got it right, and gave the people of York something to embrace.

"We want to create an exemplar of world-class residential accommodation in York, as a final piece in the jigsaw of what the city has to offer. We envisage this scheme will attract national and international business leaders to live in the city and invest in the city."

The 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.

The properties will use existing parking to the right of the property, and garage space under the mews houses at the rear.

Mark Finch, director of Real Estate at Rushbond, said: "When it was built in the 1830s, St Leonard’s Place was the pinnacle of fine living in York - and it can be so again.

"Our plans will see us create a stunning high-quality residential development that can exceed anything else in the region and indeed the North of England.

"We need to ensure we can bring the building back into a sustainable and beneficial use and to support the exciting investments planned in this part of the City, including the restoration of the Art Gallery and the redevelopment of the Theatre Royal and Explore Library, as soon as we can."

A planning application for the scheme is due to be submitted in coming weeks, with a decision expected in November.

If approved, work will start by next March, with the first homes available within a further 15 to 18 months.

City of York Council leader James Alexander said: "This is great news. The development of St Leonard's will mean an iconic building in York being put back into use in the way it was originally intended and after some time.

"I’m pleased also that the developers are keen to meet affordable housing commitments.

"It joins a growing list of investments and important developments in the city being progressed or completed in recent months after long periods of stagnation, such as the Bonding Warehouse, Terry’s and White Swan."

Rushbond had bought the premises from the council in 2006 and leased them back to the authority until last March, when the council moved to West Offices in Station Rise.