British Land halts further work on 3,700-home Canada Water project, according to reports

British Land has reportedly paused development on its £4bn Canada Water scheme due to viability issues and slow sales of homes it has already completed.

The developer has halted the second phase of the 3,700-home scheme because of persistently high regulatory, material and labour costs, according to Bloomberg.

The move would make the developer the latest to pull the plug on a major London housing scheme amid worsening development costs following Landsec’s decision last week to “de-prioritise” its 2,800-home redevelopment of Lewisham shopping centre.

British Land has already completed 265 homes as part of the first phase of its Canada Water project including a 35-storey residential tower called The Founding, designed by the scheme’s masterplan architect Allies and Morrison.

But the developer is now expected to wait for market conditions to improve before starting work on the second phase following disappointing sales of homes completed in the first phase, Bloomberg reported.

The project, first approved in 2020, would have originally delivered 2,815 homes and 4.7 million sq ft of retail, office and leisure space with 35% of its housing classed as affordable, provided as 25% social rent and 10% intermediate. 

But it has faced viability issues for around two years with a radical redesign of the scheme submitted in January 2025 increasing the height of 11 buildings by up to 13 storeys and adding 885 homes.

The developer said at the time that the revisions were prompted by the sharp post-pandemic rise in construction costs, a slowdown in the housing market and regulatory changes including requirements for second staircases in residential buildings above 18m. 

The scheme was then called in by Sadiq Khan in December 2025 after a Southwark council report found the project could only deliver a 3% share of affordable housing without public subsidy.

City Hall approved the revised scheme in March this year alongside a grant of an undisclosed sum which it said would enable the scheme’s share of affordable housing to increase to 9%.

The second phase of the project was due to start on site next year with a 20% share of affordable homes in this phase.

Other architects working on the masterplan include Morris & Company, Hawkins Brown and Townshend Landscape Architects. 

The wider project team includes Aecom as project manager, DP9 on planning, Arup on transport, Waterman on structures and environment and GIA on daylight.

Mace and Wates were the main contractors on the first phase of the scheme, which started construction in 2021.

British Land, Allies and Morrison and the mayor of London have been approached for comment.