The transformation of a former pub site has moved a step closer, with confirmation of planning permission for new homes in the Northumberland village of Widdrington Station.

Empty and derelict for over five years, The Willows is set to make way for 22 new affordable homes, to be developed by Two Castles Housing Association with funding from the Homes and Communities Agency (HCA). The development, close to the market town of Morpeth, will be built by North East company Dunelm Property Services.

Five 2-bedroom houses, nine 3-bedroom houses and eight bungalows will be among the first in Northumberland to reach Level Four of the Government's Code for Sustainable Homes.

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"With a range of eco-friendly features, including energy-efficient solar panels, compost bins and cycle storage, the new homes will be a step up for greener living in Northumberland," said Alan Davies, investment and regeneration manager at the HCA.

The development – which includes 17 homes for rent and five available for shared ownership – has secured £1.1m in funding from the Homes and Communities Agency (HCA) and £36,717 from Northumberland County Council.

"Two Castles Housing Association is committed to providing high quality, affordable homes and there is a definite demand for this in Widdrington Station," said Rob Brittain, property services director at Two Castles Housing Association.

"We are extremely pleased to have received planning permission and plan to commence demolition of the old building on 7 February, with completion anticipated in December 2011.

"This is an excellent example of partnership working. We have complemented our housing development experience with the private sector knowledge and expertise of Dunelm Property Services."

(CD/GK)