Sadiq Khan’s London housing fund may need bailout, auditors warn

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Sadiq Khan’s leading London housing fund could require a bailout after repeatedly defaulting on a £300m government loan and defaulting on debt records, its auditors have warned.

GLA Land and Property (GLAP) Limited, the: London the mayor’s property development vehicle has repeatedly missed loan payments over the past six years and only made its first payment this year.

The company, which is owned by the Greater London Authority, may need financial “support” from the mayor’s taxpayer-funded budget to repay the loan in full, internal auditors said in a report this month.

GLAP was established in 2012 when Boris Johnson was mayor and owns 635 hectares of land in the capital, mainly in the London Docklands redevelopment area. Khan has been mayor since 2016.

The commercial vehicle was created from a merger of previous public development authorities and inherited the £300m debt owed by the Greater London authority when it was formed.

The amount was supposed to be repaid from 2018, but GLAP did not make any payments in the following years.

GLAP is staffed by GLA officers, while Khan’s chief of staff, David Bellamy, and Tom Copley, London’s deputy mayor for housing, sit on its steering group, which makes executive decisions about the fund.

The GLA’s internal auditors last year raised concerns about poor management and decision-making at the company and said they had been “provided no evidence” why repayments were repeatedly missed, according to a December 2023 audit report.

“No supporting documents were provided to formally agree to the loan default,” the report said. It added that “meeting minutes . . . has not been adopted, showing adopted decisions.”

The 2023 report warned: “There is a risk that credit decisions are not formally agreed, documented, and risk management processes are not implemented.”

Redacted copies of the previously unreported 2023 and 2024 documents are available on the Mayor of London’s website. Full, unedited versions of the reports have been provided to the Financial Times by London Centric.

GLAP said it paid £33.3m of its outstanding loans in March this year, and this year’s auditors’ report said some management improvements had been made, including the collection of minutes.

The trust, which is one of the UK’s largest public sector land owners, aims to deliver thousands of new homes in the Mayor’s area.It is a commercial subsidiary of the GLA.

London needs to double its annual housing supply to meet its official housing targets, even after Britain’s new Labor government slashed the capital’s target by 10 per cent.

The UK government wants to boost house building to its highest level in decades, building 1.5 million homes in five years.The number of new homes in England fell by 6 percent to 221,070 in March.

The GLA said that between 2016 and March this year, 13,460 homes were completed within the GLAP portfolio.

It added that the loan repayment schedule had been revised “due to the prolonged national economic downturn which has seriously affected the property and construction industry in the UK”.

The years between 2018, when loans were first due to start, and the Covid-19 pandemic saw the highest level of new housing supply in England since the 2008 financial crisis.