A DERELICT Newport brownfield site which was once home to the Whitehead Steelworks could be set to host hundreds of new affordable homes.

Today, the Welsh Government announced it would lend £7 million to a not-for-profit group planning to build up to 400 homes on the 39 acre site in Pill.

A new primary school has also been proposed there.

Economy minister Edwina Hart said the project would help “transform a brownfield site into a thriving community and provide affordable homes where people want to live, and which are within the financial reach of young families and lower income families.”

Under the terms of the loan at least half of the development would need to be so-called affordable housing, rather than simply sold on the open market.

No planning permission has yet been sought – applications are set to be filed in the next few months and it is hoped the first homes could be built by 2016.

Its been claimed the project could create 1,500 jobs and deliver a £140 million boost to the area.

The loan will be going to Whiteheads Development Company, a subsidiary of not-for-profit organisation Tai Tirion which was itself set up following an initial alliance between Welsh Government and the Principality.

Tai Tirion chief executive David Ward said remedial work would be needed at the site, which closed as a steelworks around 10 years ago.

“Clearly there’s contamination – there’s been a lot of site investigation done over the years. It’s got its challenges but I don’t think its anything that can’t be dealt with,” he said.

Mr Ward said they have looked at initial locations for a primary school on the site, which is required partly because of a shortage of spaces within Pill.

The move was welcomed by Newport council leader Bob Bright who said it is “another excellent boost for the city’s regeneration”.

As well as the Newport development the Welsh Government yesterday announced a £1 million loan for a 260 home site in Parc Eirin, Tonyrefail – also backed by Tai Tirion.