Taylor Wimpey reported the deficit for the six months to June 30 after writing off £586m from its UK land portfolio as well as more than £816m linked to goodwill recognised from the merger between Taylor Woodrow and George Wimpey last year.

In another picture of the impact from the housing market downturn, the firm's underlying profits plunged 96 per cent to £4.3m during the period, with house sales down nearly a third.

Rivals Persimmon, based in York, and Bovis Homes have also revealed big half-year profit slumps as the industry grapples with a mortgage squeeze and battered consumer confidence.

Taylor Wimpey has offices in Wakefield, Sheffield and Leeds. Despite calls for comment, no-one was made available to speak to the Yorkshire Post about the firm's performance in the region.

The company, which is labouring under a £1.7bn debt mountain as well as the housing market woes is still trying to secure breathing space from its lenders.

The group faces breaching its banking covenants – which measure how well placed the firm is to repay the debt – because of its poor results, and investors were hoping to hear new arrangements announced yesterday.

But chief executive Pete Redfern said discussions with banks were continuing. "Our key priority is renegotiating our covenant structure," he said.

"We are in the middle of discussions with our lenders... and we feel pretty happy with the way that process is going."

Mr Redfern added that he was not expecting to have to raise new capital in order to strike a deal with lenders, which comprise a range of banks and US private investment firms.

With Taylor Wimpey's total house sales down nearly 31 per cent to 8,494 during the "very challenging conditions" of the first half, Mr Redfern said the other main focus of the business was on improving cashflow.

To help the cash position, he has cancelled the firm's interim dividend payment this year. This comes on top of the closure of 13 regional offices and 900 job losses this year.

Mr Redfern said the group had sold around 200 properties a week during the past five to six weeks in the UK – which represented "some improvement" compared to the second quarter – but that prices and margins were coming under pressure in order to shift the stock.

Incentives being offered include paying stamp duty and legal fees.

Mr Redfern said: "We are actively driving sales, and our margins are coming under pressure. Our prices will be under pressure too." Average prices for the firm's UK private home sales were down 10 per cent during the first half against a year ago.