Westminster City Council is investigating The Emory, a five-star Knightsbridge hotel owned by members of the Qatari royal family, over an alleged breach of planning obligations.
The hotel's 2019 approval required 13 market homes to be delivered, but the space was instead used for hotel operations, managed by Maybourne Hotels.
A proposed alternative scheme in Paddington has also failed to materialise.
The Daily Telegraph reports that the council will consider enforcement action if a revised legal agreement isn't finalised by an agreed deadline.
