The nursery's adjacent primary school, the former Woodburn primary, is also being used for housing development.
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The building was vacated when the council built a new primary and nursery school in Woodburn in 2009.
Providing affordable homes for rent is one of Midlothian Council's priorities, with over £164m committed to developing affordable housing.
The Council wants to provide up to 1,500 houses for rent in the next few years.
Even with investment however, there are still over 4,500 people on council waiting lists.
(JG/CD)
