A DEVELOPER has pulled out of a major housing regeneration scheme because of the ‘credit crunch’.

Gleeson Regeneration’s decision to withdraw from the scheme to build new houses in the Duke Bar, Daneshouse and Stoneyholme area as part of efforts to halt neighbourhood decline was down to the recent economic downturn, the council said.

The private developer, who had first option to build ‘several hundred new homes in Burnley’, said their decision to pull out of plans to develop housing in one of the town’s three regeneration areas was ‘not taken lightly’.

Burnley Council said the withdrawal by Gleeson will not impact on the development of 18 houses in the area by Great Places, with the housing association already in negotiation with Burnley Council to explore further development opportunities.

The council is looking at replacing Gleeson with one developer or a number of smaller ones.

Burnley Council leader, Gordon Birtwistle, said: “Gleeson’s are operating difficult economic times; their decision reflects this, but this council will continue to move forward.”

Lee Sale, Managing Director of Gleeson Regeneration and Homes, said: "Due to further downturn in the national economic climate, it is with deep regret that Gleeson Homes and Regeneration are no longer able to continue their proposed development of new neighbourhoods in conjunction with Burnley Borough Council."

The difficult economic environment has put pressure on housing development across the borough, including the two other regeneration areas of South West Burnley and Burnley Wood, but bosses remain confident that funds coming into Burnley will improve these areas over the lifespan of the project.

Burnley Council chief executive Steve Rumbelow said: “We do not expect there to be any delay as a direct result of Gleeson’s withdrawal.

"Current market conditions mean it is very difficult to build any new private development.”

He added: “Gleeson’s involvement in Burnley was still at a very early stage therefore they had no firm plans. We were in the process of assembling sites which over the long-term could have accommodated several hundred homes.”

Max Steinberg, chief executive of Elevate East Lancashire, the housing market renewal pathfinder, said: “The credit crunch is providing everyone with a new set of challenging circumstances.

“The withdrawal by Gleeson is disappointing but we will work closely alongside Burnley Council to ensure that any impact on the long-term transformation of neighbourhoods in the borough is minimised.