PRIME building sites in York could be left vacant because firms cannot afford to develop them, it is claimed.

An estate agent warned builders may start pulling out of the city because of costly planning rules.

Keith Hollinrake, director of York property firm Hunters, said builders were finding it difficult to set aside 50 per cent of their sites for affordable homes and still make a profit.

"One of our clients, a Yorkshire-based property entrepreneur, is considering withdrawing plans to redevelop a brownfield site in York," he said.

"Our client was not going to develop the site himself, but wanted to sell it to a builder. But the amount of affordable homes that would have to be built cost so much money the developer would actually make a loss."

City of York Council expects builders to set aside 50 per cent of developments for affordable homes, in a bid to help first-time buyers struggling to get on the property ladder.

But the policy has raised concerns among builders, and York Property Forum, which was set up in 2002 to promote positive development in York, has discussed the issue.

Secretary Chris Thomson-Smith said members, who were made up of developers, housing associations, architects and construction firms, were worried the policy would have "a damping effect" on the amount of land becoming available.

He said: "As profit from redevelopment is reduced, marginal landowners may become unwilling to abandon existing uses. Certainly no landowners will be encouraged to develop in consequence of the policy."

Ian Morris, spokesman for Taylor Woodrow, said: "Local authorities do have to make provision for affordable housing - but it is a pity there isn't more flexibility in the system.

Council leader Steve Galloway said: "When the planning committee made the decision, councillors did talk about the possibility it might disadvantage some types of development."

"But they were quite clear that if there were exceptional costs involved with developing a particular site, perhaps because of contamination or access problems, we could relax the rules."

Updated: 10:45 Friday, January 13, 2006