Members of Scarborough Council’s cabinet said they were “baffled” to find that Linden Homes was advertising properties at the Middle Deepdale in Eastfield outside of Scarborough as ‘Cayton Reach’.
The developer is bringing more than 100 new properties to the market on the site.
Cayton, one of the borough’s wealthiest areas, is two miles south of the development.
Eastfield ward borough councillor Tony Randerson told Tuesday’s cabinet meeting that members of the town council were “furious”.
He said: “Linden Homes are calling their site Cayton Reach.
“This is going on time and time and time again. Rather than being called Eastfield it’s Cayton Reach.
“It is one community but they want to disassociate themselves with the name Eastfield. Anything but Eastfield the developers will call it.
“It needs nipping in the bud as we are going to have two communities up there if we are not careful.
“Cayton is a bus ride and a half away from Eastfield. It’s an absolute disgrace.
Council leader, Cllr Derek Bastiman (Con) , said he agreed with Cllr Randerson “fully”.
He added: “It was also seen to be part of Eastfield, not an offshoot of other names.
“It’s creating two communities and it isn’t on.”
Communities portfolio holder Cllr Sandra Turner (Con) also expressed her confusion at the name.
She said: “This development is supposed to be regenerating Eastfield not about discriminating and putting a dividing line between them.”
Cllr Bill Chatt said it was about money.
He said: “They want to say it’s Cayton. These are developers, not people who live there and they are creating a divide.”
Cllr Chatt is to investigate what means the council has to try and get the name changed.
A spokesman for Linden Homes East Yorkshire said: “Careful consideration is given to the naming of all of our developments, taking into account the local area and points of interest – and the same approach has been taken with regards to our location in Scarborough.
“With Cayton and Cayton Bay just a few short miles from Middle Deepdale, using the name seemed an obvious choice when it came to naming the development – making it of course, within easy reach of residents buying one of our new homes.”