A Winchester retirement home owner says government regulations and business pressures may force her to close.

Residents and staff at Hermitage House, in Cheriton Road, were shocked when they found the building could be demolished to make way for housing.

But owner, Fabiola James, insists she has not yet decided whether to close and sell the property to developers, Red Line Developments.

She did, however, admit it was becoming increasingly difficult to run a small private home. Currently, there are 17 residents, cared for by 17 members of staff.

"This is a small business, but with all these changes in law, we may never be able to continue as a home. Government now wants wider doorways, wider passages and no steps. They make these laws, then backtrack and you don't know where you are."

Mrs James said last year the home was only half-full and losing money, so she approached Winchester estate agents, Christie and Co, to find out "how much the property was worth and what possibilities there were". She added: "This is only a private business and if you lose money, there's no business."

Only a year ago, the Friary Nursing Home in St Cross Road, was forced to close after the owner said he received inadequate funding for residents whose care was paid by the council.

Mrs James also said her husband was very ill, and she was waiting to see how he would recover before making any decision. "I am not saying whether I am closing. It's dependent on many factors," she said.

However, Emma Plumridge, from Red Line Developments, said the company had agreed to buy the property from Mrs James at the beginning of the summer, after it was put on the market with Christie and Co.

"We have agreed to complete with the James's next summer. They wanted a year to wind down their business and we agreed."

Based on that contract, the company has an arrangement to sell the property to Linden Homes, who want to redevelop the site.

Patrick Feighery, MD of Linden Homes Southern, said they had consulted with other residents in Cheriton Road and Winchester city planners. "We are now in the process of re-jigging things after hearing their comments."

The plan to demolish the home has been submitted to Winchester City Council and will be discussed at a planning meeting shortly.