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Sadiq Khan’s flagship London housing fund may require a bailout after repeatedly missing repayments on a £300mn state loan and failing to keep records about the debt, its auditors have warned.
GLA Land and Property (GLAP) Limited, the London mayor’s property development vehicle, has repeatedly missed payment deadlines on the loan over the past six years and only made its first payment this year.
The company, which is owned by the Greater London Authority, may require financial “support” from the mayor’s taxpayer-funded budget to fully repay the loan, according to an internal auditors’ report this month.
GLAP was set up in 2012, when Boris Johnson was mayor, and owns 635 hectares of land in the capital, primarily in the London Docklands redevelopment area. Khan has been mayor since 2016.
The commercial vehicle was created from the merger of previous public development bodies and inherited the £300mn liability owed to the Greater London Authority when it was formed.
The money was due to be repaid from 2018, but GLAP failed to make any payments over successive years.
GLAP is staffed by GLA officers, while Khan’s chief of staff David Bellamy and Tom Copley, deputy mayor of London for housing, sit on its steering group that makes executive decisions about the fund.
The GLA’s internal auditors raised concerns last year about poor management and decision-making at the company, and said they were “not provided with evidence” why repayments were repeatedly missed, according to a December 2023 audit report.
“No supporting documentation to formally agree the non-repayment of the loan was provided,” the report said. It added that “minutes of meetings are . . . not taken showing any decisions made”.
The 2023 report warned: “There is a risk that decisions made on the loan have not been formally agreed, documented and processes are not in place for the management of risks.”
Redacted copies of the previously unreported 2023 and 2024 documents are posted on the London mayor’s website. Full, unredacted versions of the reports were shared with the Financial Times by the London Centric website.
GLAP said it paid £33.3mn towards its outstanding loans in March this year, and the auditors’ report from this year said some management improvements had been made, including the taking of minutes.
The fund — which is one of the largest public sector land owners in the UK — aims to deliver thousands of new homes at the mayor’s land. It is the commercial subsidiary of GLA.
London needs to double its annual housing supply in order to hit its official housing targets, even after the new UK Labour government reduced the capital’s target by 10 per cent.
The UK government wants to increase housebuilding to the highest level in decades, building 1.5mn homes over five years. The number of new homes in England fell 6 per cent to 221,070 in the year to March.
The GLA said that 13,460 homes were completed within GLAP’s portfolio from 2016 to March of this year.
It added the repayment schedule for the loan was revised “due to the prolonged national economic downturn that severely impacted property and construction industries across the UK”.
The years between 2018, when the loans were first due to start repayment, and the Covid-19 pandemic saw the highest level of new housing delivery in England since the financial crisis in 2008.
