UPDATE 2-UK's Landbank ditches $400 mln IPO plan-source

* Plans to raise 150-250 mln pounds in private share placing

* Company had planned London IPO this week

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By Daisy Ku

LONDON, July 7 (Reuters) - UK property company Landbank ditched a 250 million pound ($405.8 million) initial public offering (IPO) in favour of a private share placement, a source familiar with the matter told Reuters on Tuesday.

The newly-formed company, which aims to acquire land for residential development, had planned a market debut on Wednesday but decided last week it would prefer a private placement to raise 150 million pounds to 250 million, the source said.

"The company still hopes to raise a similar amount through a private deal, the process is still going on," the source said. The company had planned to float its shares on the junior board of the London Stock Exchange (LSE.L).

Landbank's decision comes after NewRiver Retail, another new UK property firm, last month suspended a plan for a 250 million pound listing on London's Alternative Investment Market (AIM) which was to have been arranged by Merrill Lynch. [ID:nLQ465255]

Max Property (MAXP.L), which raised 220 million pounds in an AIM listing in May, is the only IPO to have taken place in the UK so far this year. [ID:nLL956345]

It is set to soon be joined by London Residential Opportunities, also a property firm, set up to buy discounted residential flats in London.

Landbank Chief Executive Stevan Usher is a former land buying director at Crest Nicholson [CRTNC.UL] and the company's board includes Stephen Lidgate, former chief of Laing Homes and president of the Home Builder's Federation.

The group expects housebuilders to sell land at cut-price levels to raise funds to repair their balance sheets. According to data from real estate agency Savills, the cost of land for development has fallen by 50 percent on average since the peak of Britain's housing market bubble in 2007. (Editing by Douwe Miedema and David Holmes) ($1=.6161 Pound)