Cornwall Council is set to spend an extra £750,000 to turn a derelict pub in St Austell into flats after buying the building for £1 million.
The former General Wolfe building in the town centre had previously been converted into housing after it was used as a toy shop when it closed as a pub.
The council bought the Grade II listed structure last summer to provide temporary accommodation for homeless people.
Questions were raised about the amount of money the council paid for the building with concerns it had been overvalued.
Olly Monk, cabinet member for housing, said that the council had been approached by a vendor seeking to sell the property for £1.1m and said the council undertook a valuation which factored in the rental value of the property.
As a result of this the council made an offer of £1m on behalf of their housing association, Cornwall Housing.
He explained the council wanted to use the building to provide more temporary accommodation after seeing the number of households needing emergency housing rise from around 250 to more than 700.
He added the General Wolfe building was bought as it was already being used as flats and could be brought up to standard and help provide housing.
He explained that money became available through funding from central government. They provided £750,000 which will be used to carry out the required works.
The cash is part of £7 million which has been provided for housing provision as part of the Cornwall Devolution Deal.
Credit: Local Democracy Reporter Service/Richard Whitehouse