Plans for 200 homes on site of Shrewsbury's old Shelton Hospital

The former Victorian asylum, which closed last year after being replaced by the new £46 million Redwoods mental health centre, has been purchased by Shropshire Homes for an undisclosed sum.

The firm intends to start public consultations on its plans for the site in early 2014 before submitting a planning application in March. If granted, work could begin on site late next year.

Parts of the Victorian hospital are Grade II-listed and Shropshire Homes has said it will retain "almost all" of the historic buildings at the site.

Neil Carr, chief executive officer of the South Staffordshire and Shropshire NHS Foundation Trust, which ran the hospital, said: "We considered a number of options for redeveloping the site and believe this to be an excellent use of the property. Shropshire Homes plans are sensitive and the company has a proven track record in this type of development.

"The funds we receive from the sale will be reinvested in further environment improvements across the trust."

Howard Thorne, managing director of Shropshire Homes, said: "We are delighted to have the opportunity to bring a new lease of life to these iconic buildings.

"Our plans involve the retention and conversion of almost all of the historic buildings, and the construction of new houses in the grounds and to the rear of the main hospital building. "The conversions will retain as many period features as possible and combine these with all the modern conveniences and luxuries that are expected by today's home buyers."

Shelton Hospital closed in September 2012 when in-patient mental health services transferred to the Redwoods Centre.

Up to 400 staff transferred over to the new build and around 100 new positions created at the 10-acre site.