The housing association has started on site at the Kingswood extra care scheme on Kingsway in Newton, Chester.
The scheme will contain 82 retirement living apartments, on the site of the former Woodfield School.
All of the 82 new apartments at Kingswood, which are being built by Cruden Construction, have been designed to meet the needs of people aged 55 or over and are available for a mix of shared ownership, rented and outright sale.
Funding for Kingswood includes a grant from the Homes & Communities Agency and forms part of Your Housing Group's affordable homes programme.
Cllr Adrian Walmsley, Cheshire West & Chester Council, said: "Kingswood is a hugely important development for Newton. I have been involved with this site for the past seven years and it has been a long time coming but is an exciting development for the people of Newton. I am looking forward to seeing it complete next year and welcoming not just the residents that will be occupying the Extra Care premises but the wider local community."
Kathy Cowell, chairman of Your Housing Group, said: "We all know that the country is facing an older persons housing crisis and Your Housing Group is tackling this by providing innovative extra care solutions. We are very excited to be bringing facilities to Chester, to help meet the housing need and bring much needed affordable retirement living solutions to the area."