Leicester's long-disused main post office is set to be converted into student flats.
The four-storey 1930s building in Bishop Street has stood empty – costing the taxpayer £30,000 a year – since it was bought by Leicester City Council for £1.4 million in 2008.
The council has agreed a deal to sell the building to student accommodation developer IMAP Properties, but the sale has not yet been formally completed.
Although the value of the sale will not be disclosed until after contracts are formally exchanged, the Mercury understands the building will be sold for somewhere in the region of £800,000 – meaning a large loss to the public purse.
IMAP said it intended to spend about £2.5 million renovating the property to create accommodation for 80 students.
IMAP joint managing director Vijay Patel said, subject to planning permission for the conversion, the accommodation should be ready for the start of the 2014-15 academic year.
He said: "We have had our eye on the building for six months. It is a magnificent structure in a good location.
"The location was the key thing. We will be looking at a particular market – overseas students."
His partner, Harvinder Hunjan, said the finished complex would include a coffee shop, gym, laundry and library.
He said: "We are keen to start work on the site quickly, with a view to opening in September 2014."
The council bought the building five years ago when the post office moved to WH Smith, in Gallowtree Gate, to save money.
The authority had intended to spend £5 million turning it into a customer service centre but scrapped the idea two years later because of the cost.
Mayor Sir Peter Soulsby said there had been three serious offers for the building and he had accepted the highest one.
He said: "I am pleased we have found a good use for the building and I am relieved to have it removed from the books. It was an ongoing cost to the council."
Service charges, business rates and security costs came to about £30,000 a year.
Some critics have said there is already too much student housing in the city centre, but Sir Peter said: "The universities and their students are a very important part of our economy.
"It was not cost-effective to hold on to the building and we have taken a good offer."
The building had been marketed for about £1 million.
Tory opposition city councillor Ross Grant said: "This is disappointing because if the mayor was prepared to sign off on more student accommodation, surely he could have done a deal much earlier?
"It shows people cannot trust Labour with their money, as the mayor and his councillors have lost about £750,000 on the old post office. This sale brings into question the mayor's plans for the city centre."
Liberal Democrat councillor Nigel Porter said: "I am glad it is being sold but it sounds like a big loss of public money."
Stuart Bailey, chairman of Leicester Civic Society, said: "New uses for old buildings is a good thing and this has been out of use for quite some time. I have no problem with it being student accommodation."
