Another Leeds tower set for the axe

The Lumiere residential tower scheme was also mothballed because of the collapse in the market

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The credit crunch was ready to claim the life of a second tower scheme in Leeds this week just days after the Lumiere residential tower scheme was mothballed because of the collapse in the market.

Simons Developments, part of the Simons Group, proposed the £115 million Criterion Place scheme in April 2004.

The apartment and hotel project would have involved building a 47 storey tower with a second 29 storey tower next door - and was known as a 'kissing tower' scheme.

But Simons' failure to progress the job has left the council looking at scrapping the deal.

Leeds City Council was due to discuss a number of options at the monthly meeting of its executive.

A council spokesman said: "We have a conditional contract with Simons and they have not fulfilled conditions set out in it. Specifically they have not prepared and submitted a planning application within the time-scales set out."

Other options available to the council are to proceed with a smaller project proposed by Simons to remarket the site, or to continue the site's current use as a car park, which generates revenue.

Project sources suggested this last option was the most likely as the council is understood to have a recommendation to dismiss Simons' revised proposals. Simons declined to comment.

Sources at designer Ian Simpson Architects this week confirmed that its work on the Simons scheme had been suspended.

The Manchester-based architect was also designing the West Yorkshire city's Lumiere tower which was mothballed last week by developer KW Linfoot.

The firm blamed the depressed residential market for the decision and has given no firm date when work will restart.

Leeds contractor Hewlett has been carrying out a £10 million job for main contractor Carillion on the three-storey basement at the city centre site.

But the prospects for a third tower designed by Ian Simpson look more positive with the news that Manchester-based Browns is in negotiations with developer Westbridge Living to build its £70 million Westbridge One tower in Leicester.

The 354-apartment scheme in Bath Lane requires approval from the developer's lender, the Royal Bank of Scotland.

But Westbridge project manager Ryan O'Neil said he was confident the 26-storey scheme would go ahead.

He added: "We have some conditions to do with archaeology on the site that we need to deal with but I am hoping we can get started by the end of the year.

"Leicester is a different market - it's one city where there is an undersupply of city centre apartments.

"We wouldn't be doing it if this was in Leeds or Liverpool."

Analysis: Too many schemes, too little cash

By Michael Ladbrook

Leeds is representative of some of the problems in the housing market, although its issues are compounded by the size and number of schemes and the shortage of investors.

The market for flats in cities just isn't there now, with first-time buyers and investors concerned about falling prices.

Investors will also be concerned about whether in the future they will be able to sell the flats they purchase because there is so much else new available.

However, there are some glimmers of hope, with schemes that have a mixed-use element or housing-related schemes rather than apartments standing a better chance.

But generally for private residential developments, it looks likely to remain slow for a year or more until funding and buyer confidence comes back.

Michael Ladbrook is head of the residential sector at Davis Langdon