Stay informed with free updates
Simply sign up United Kingdom property myFT Digest – delivered straight to your inbox.
Sadiq Khan's leading London housing fund may need a bailout after repeatedly defaulting on a £300m government loan and failing to keep records about debts, auditors have warned.
GLA Land and Property (GLAP) Limited, London The mayor's real estate development company has repeatedly missed loan repayment deadlines over the past six years and only made the first payment this year.
The company, owned by the Greater London Authority, may need a financial “boost” from the city's taxpayer-funded mayor's budget to repay the loan in full, internal auditors report this month.
GLAP was founded in 2012, when Boris Johnson was mayor, and owns 635 hectares of land in the capital, most of it in the London Docklands redevelopment area. Khan has been the city's mayor since 2016.
The commercial vehicle was created from the merger of former public development bodies and inherited £300 million worth of liabilities owed to the Greater London Authority upon its formation.
The money was due to be repaid starting in 2018, but GLAP failed to make any payments over successive years.
GLAP is staffed by officers from the GLA, while Khan's chief of staff David Bellamy and Tom Copley, the deputy mayor of London for housing, are members of the steering group that makes executive decisions on the fund.
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” as to why it repeatedly defaulted, according to a December 2023 audit report.
“No supporting documentation was provided to formally agree to not repay the loan,” the report said. She added, “Minutes of meetings. . . “They are not made to show any decisions have been made.”
“There is a risk that decisions made on the loan have not been formally agreed and documented and there are no risk management processes in place,” the 2023 report warned.
Redacted versions of previously unreported 2023 and 2024 documents are being published on the Mayor of London's website. Full, unredacted versions of the reports were shared with the Financial Times through the London Centric website.
GLAP said it paid £33.3m for its outstanding loans in March this year, and this year's auditors' report said some management improvements had been made, including the recording of minutes.
The trust – one of the UK's largest public sector landowners – aims to deliver thousands of new homes on the mayor's land. It is the commercial subsidiary of GLA.
London needs to double its annual housing supply to meet its official housing targets, even after the UK's new Labor government cut the capital's target by 10 per cent.
The UK government wants to increase housebuilding to the highest level in decades, by building 1.5 million homes over five years. The number of new homes in England fell by 6 per cent to 221,070 in the year to March.
The GLA said 13,460 homes had been completed within the GLAP portfolio from 2016 to March this year.
He added that the loan repayment schedule had been adjusted “due to the protracted national economic downturn which has severely impacted the property and construction industries across the UK”.
The years between 2018, when loans were first due to start repaying, and the Covid-19 pandemic saw the highest level of new housing delivery in England since the 2008 financial crisis.
