The land in Paignton is one of three sites in Torbay awarded Government money to get ready for new homes.
The fields, currently used by Occombe Farm, are leased to Torbay Coast and Countryside Trust by Torbay Council.
A report says the council’s ecological advisers have carried out surveys which found none of the habitats or species that live on the site justify it being a nature reserve.
The area of just over 10 acres was awarded £1.1m from the Government’s Housing Release Fund (HRF) to prepare it for new homes by March 2020.
Councillors are being told the authority could be in breach of the housing grant rules if it fails to de-register the land.
The Preston Down Road land is described as a potential housing site in the Torbay Local Plan.
The land was one of two sites leased to the Torbay Coast and Countryside Trust which were awarded grants.
Any redevelopment deal will have to be in place by March 2020 or the grant will have to be repaid.
The cabinet decision will go to the next meeting of the full council for approval.
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