Taylor Wimpey has announced it is to write down £550 million on its UK land holdings, as the property market continues to fall.

The organisation – the country’s largest house builder – confirmed its “cautious outlook” on the sector had been bourn out, with the property market now entering a “significant downturn”.

In addition Taylor Wimpey will also write down the value of its holdings in the US by approximately £70 million and in Spain by £40 million.

In response, the housebuilder has suspended all land purchases, as of September 2007.

Following “significant reorganisation” within the company, Taylor Wimpey now also expects substantially reduced overheads.

“However, in light of current market conditions and to protect against the risk of further deterioration, we have agreed an amendment to the terms of the revolving credit facility with our banks,” explained a statement released this morning.

“This includes suspending the covenant based on net interest in relation to earnings before interest, taxes, depreciation and amortization (EBITA), which we believe is not appropriate in current market conditions, in favour of one based on operating cash flow, reflecting our ability to generate cash.”

Housebuilders have been particularly hard hit following the credit crunch, with prices for UK property continuing to fall, with mortgage lending also significantly reduced.

Figures released by the Land Registry on Friday show house prices fell for the ninth consecutive month during May.

Thus slump in the market has prompted Taylor Wimpey to seek additional finance, in order to ensure an appropriate financial structure is maintained.

“We have instigated discussions with shareholders and other institutions regarding raising additional financing, which would most likely be via a placing and open offer,” added the statement.

Further details are anticipated to be released with the half year trading update, expected on July 2nd.