Planning permission for nine new homes on land that used to house the Beehive pub in Shifnal was granted in March and the builder TC Homes, working in partnership with Housing Plus Group, has started work.
Kerry Bolister, director of development at Housing Plus Group, said: "Since it was closed in 2017, the pub and its car park have become something of an eyesore, attracting anti-social behaviour and many in the town will welcome the start of work to transform the site.
"The scheme has also won the backing of councillors for providing homes in an area with very high demand for affordable accommodation."
TC Homes, which has worked with Housing Plus Group on previous projects and brought this development to the attention of the housing association, is the construction partner on the project that will see nine, three-bedroomed houses built.
Built as three terraces, they're expected to be completed by May 2022.
Tim Charnley, TC Homes director, added: "We are excited to get started on our new project with the Housing Plus Group. The build will consist of nine affordable houses for the local community and will utilise a space that has sat dormant for some time.
"With the country having such a large housing shortfall, we hope our contribution to the construction of affordable homes will benefit the surrounding community and provide opportunities to local sub-contractors and suppliers.
"We appreciate that any kind of construction can cause some inconvenience to those directly affected but we hope with working in partnership with residents, schools and the wider community we can achieve another fantastic development."
The development is part of plans by Housing Plus Group to build 2,000 homes across Shropshire and Staffordshire by 2023.