A DERELICT North-East hotel is set to become accommodation for 130 students following a change of ownership.

The Swallow Hotel, once one of Teesside’s largest, opened in 1972 but closed in 2009 and the building subsequently stood empty on Stockton High Street.

Whitbread has now surrendered its lease on the property back to shopping centre investor Ellandi LLP which has plans to breathe new life into the site.

Tim Cornford, Ellandi's asset manager, said: “We are thrilled to have the hotel back in our ownership as this will allow us to progress talks with interested operators.

"We are in advanced talks with a student housing provider and we hope to conclude a deal in the coming months with a view to the property opening as high quality student accommodation in the next couple of years."

Mr Cornforth said that a multi-million pounds investment would be made to transform the site.

He added: “The hotel commands a prominent position on the high street and we are determined to bring this area back to life.

“Working with Stockton Council and the local MP Alex Cunningham, we will continue to support the regeneration of Stockton Town Centre.”

Ellandi, owners of Stockton's Castlegate Shopping Centre, has played a role in the regeneration of Stockton High Street in recent years. More than £5m has been spent in the shopping centre located on the same site as the former Swallow Hotel. This has included car park improvements, refurbishment of Spencer Market Hall and a series of community events.

Bob Cook, Leader of Stockton Council, said: “This is good news for Stockton and the High Street. Since the hotel closed five years ago the Council has held regular discussions with Ellandi which owns the adjoining Castlegate Shopping Centre and offered on-going support, where possible, to find a way for this major building to be brought back into use.

“I am delighted that they have now been able to secure control of the building and I am looking forward to hearing about their future plans for the site. I am sure the building will be transformed into a landmark which will complement the transforming look and approach to Stockton.”