Hopes for a much-needed school in a prison on the border of Richmond and Kingston have been dashed by councillors who admitted both boroughs do not have enough money to buy the land.

The Latchmere House site, which closed its open prison last year, is owned by the Ministry of Justice who plan to sell it on.

Concerned residents attended a public meeting to discuss the future of the site on Wednesday evening.

The possibility of a school was dismissed due to a lack of accessibility, but councillors admitted they would not be able to afford to bid for the land.

Nicola Smith, from Kingston Council, said: “There is no question about a need for a school, but the councils do not own this site therefore we can’t decide that it should be a school.

“The site will be worth millions of pounds and as councils we just do not have the ability to purchase this land. That’s the reality of the situation.”

Richmond councillor David Williams said: “We can say to the Ministry of Justice you can have the most expensive park here, but it isn’t going to happen. Something is going to be built here.

“The site will be housing. There will be quite a hard case to be made that it could be anything other than housing because the Ministry of Justice will take the highest bid. That is the hardest constraint we face.”

The site cuts through both Richmond and Kingston, which means both boroughs will be involved in its planning consultation process over the next few months as the bids come in.

To date the councils have been unable to secure Latchmere House as a listed building despite many residents calling for the site’s heritage and green spaces to be retained.

Morgan Reynolds, 81 and a grandfather-of-11, of Bainbridge Close, Kingston, said: “I think they have already made a decision because it has been advertised as housing.

“A school has not been considered and I very much doubt it will be. A school is quiet, does not open on weekends and has long holidays so the traffic is not as bad. I am disappointed.”

The sale is expected to be agreed by Easter next year.