The biggest development of low cost homes ever built in the North East will form part of a new urban village on the site of a former paper mill beside the River Don in the Tillydrone area of Aberdeen.

The Scottish Government is committing £21 million, with local housing associations providing another £12 million to build 209 homes for rent or shared equity, made up of flats, and two, three and four-bedroom properties.

The new urban village, scheduled for completion in 2014, will also include office space and business start up units, a children's nursery, neighbourhood shops, and a further 77 units for private sale.

The remainder of the funding package - £22 million - is investment from Tenants First Housing Co-operative, Langstane Housing Associations and private finance, bringing the total to £55 million.

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Minister for Housing and Communities, Alex Neil said: "This development marks a historic milestone for social housing in the North East. It is the biggest project of its kind ever undertaken in the region, which will not only offer quality affordable homes for local families, but will also provide a tremendous economic boost for Aberdeen.

"It is excellent news for the hard-pressed local construction industry and related businesses.

"In 2010-11, despite entering a period of tight budgetary constraint, this Government is doing all it can to help increase the supply of affordable homes for first time buyers on modest incomes.

"This development is a shining example of partnership working between Devanha, Aberdeen City Council and the Scottish Government."

Sandy Murray, Chief Executive of Tenants First Housing Co-operative said: "The Donside Urban Village is the key to our ambitions to develop new affordable homes in Aberdeen. It is an excellent example of social housing providers working together with government at both national and local levels.

"We believe the Donside Urban Village is a flagship development that would prove a fitting launch pad for the regeneration of the Tillydrone area of the city.

"It will not only bring new life to a derelict brownfield site, we see it acting as a catalyst for further regeneration within the community."

(GK)