British Land has put the next phase of its £3.6bn Canada Water development on hold, adding to mounting evidence of a housing market struggling to support major new-build schemes.
The property group has paused plans to advance the next phase of its 53-acre regeneration project in south-east London.
Weak sales, rising construction costs and difficult market conditions have cast doubt over the viability of further development.
British Land is understood to be waiting for conditions to improve before pressing ahead.
The setback comes just weeks after housing secretary Angela Rayner admitted there was only a “slim chance” of Labour delivering 1.5 million homes by the next election.
Just 57 apartments sold
British Land has planning permission for up to 4,184 homes at Canada Water.
The first phase includes 186 apartments at The Founding, nearly 80 affordable homes and 245,000 sq ft of office space.
However, the company revealed in May that it had sold just 57 apartments.
It also reported a 6.9% fall in the development’s valuation during the previous financial year.
British Land cited difficult market conditions, leasing and sales challenges, and changes to the scheme.
The company is developing Canada Water alongside Australian pension fund AustralianSuper.
The decision follows a series of setbacks for major London housing schemes, while Taylor Wimpey chief executive Jennie Daly recently described the capital’s housebuilding market as “fundamentally broken”.
The latest setback comes against a bleak national housebuilding picture.
Official estimates put net additional homes in England at around 199,500 in 2025/26, down from 208,600 the previous year.
That remains well below the roughly 300,000 additional homes needed annually to meet Labour’s manifesto commitment.
Housing secretary Angela Rayner acknowledged the scale of the challenge last month.
“It’s a slim chance, but I’m definitely not giving it up,” she told the BBC.
She blamed rising construction costs and wider economic pressures, including the Iran war.
Higher mortgage costs have also weakened buyer affordability, while developers face mounting pressure on profit margins.
For estate agents, a slowdown in construction threatens to restrict the pipeline of new-build instructions.
British Land’s decision is another warning that planning permission alone cannot guarantee new homes will reach the market.
With major developers delaying investment and sales struggling to gain momentum, Labour’s housing ambitions look increasingly difficult to deliver.
