Twenty three houses, 20 cottage flats and a bungalow – all for social rent – will transform the site on which the town’s former Campbell Hospital once stood.

Sanctuary Scotland Housing Association will manage all 44 homes, the last of which will be completed next summer.

Councillor Anne Stirling, chair of Aberdeenshire Council’s communities committee, formally marked the start of construction in Portsoy’s Park Crescent.

Banff and District ward members John Cox and Glen Reynolds joined Councillor Stirling to hear Sanctuary’s plans for the town.

Councillor Stirling said: “It is great to see work beginning on this development. Not only is it bringing new life to the former hospital site, it will deliver additional rental accommodation in north Aberdeenshire that I know will be very welcome.

“These properties very much support the objectives of our strategic housing investment plan and we’re very pleased to be working with Sanctuary Homes once again.”

The 44 homes are Sanctuary’s first new-build properties in Aberdeenshire since 2015 when 12 houses were completed in Strichen. The properties will complement the 18 homes already managed by Sanctuary Scotland in Portsoy. Sanctuary has also made a commitment to improve the play park in the town’s Murray Place as a project-related community benefit.

Pat Cahill, director of Sanctuary Scotland, said: “Having lived and worked most of my life in the North East I’m delighted we are working with Aberdeenshire Council and the Scottish Government to improve the area’s affordable housing stock.

“This project will give 44 families a high quality home for social rent. The improvement works to the park will further enhance Portsoy, giving new and existing residents a place to play.”

The £6.1 million project was helped to site by a £3.9m Scottish Government grant. Keys to the first homes will be handed over to local families in February.

Local firm Robertson Partnership Homes is Sanctuary’s site contractor.

Neil Donald, regional director, Robertson Partnership Homes, said: “This negotiated design and build contract is our first with Sanctuary Homes in this region – a major milestone for Robertson Partnership Homes as we become established in the North.

“We will be bringing all of our experience to bear on this project, ensuring we deliver affordable homes of the highest quality which residents will be proud to call home. We’re excited to start work at one of the best known sites in Portsoy and to further build our relationship with Sanctuary and Aberdeenshire Council.”