Taxpayers may need to bail out Sadiq Khan’s London housing fund, say auditors

Taxpayers may be forced to bail out Sadiq Khan’s London housing fund, after it repeatedly missed repayment deadlines for a £300m loan and its auditors raised concerns over poor management.

The London mayor’s property development vehicle, known as Greater London Authority Land and Property Limited (GLAP), inherited the £300m debt when it was formed under Boris Johnson in 2012, after a merger of other public development bodies.

The fund, which is one of the largest public sector land owners in the UK, is meant to create thousands of new homes on its land in an effort to ease the country’s housing crisis.

The developer is a commercial, wholly owned subsidiary of the Great London Authority – and the money was due for repayment to the GLA in 2018. The GLA is effectively a tier of regional government consisting of an elected mayor and the London Assembly.

However, GLAP has repeatedly missed repayment deadlines over the past six years, and only made an initial payment earlier this year, according to documents obtained by the London Centric website and also seen by the Financial Times.

The fund owns 635 hectares (1569 acres) of land across the city, mostly in the London Docklands redevelopment area and on the Greenwich Peninsula near the O2 – areas that have been tipped for heavy development.

Internal audit documents reportedly raised concerns last year over poor management and decision-making at the fund. Internal auditors were “not provided with evidence” about why repayments were repeatedly missed.

“No supporting documentation to formally agree the non-repayment of the loan was provided,” the report said. “Minutes of meetings are …  not taken showing any decisions made.

“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.”

The fund is run by some of the London authority’s top officers, including Khan’s chief of staff, David Bellamy. The deputy mayor of London for housing, Tom Copley, also sits on the steering group that makes executive decisions about the fund.

Auditors raised questions over whether Khan, who has been mayor since 2016, will eventually use financial “support” from his taxpayer-funded budget to help settle its debts, the FT reported.

A spokesperson for Khan said: “The mayor is working closely with GLA Land and Property Limited to help build a fairer London for everyone, delivering up to 68,000 new homes while helping to create thousands of jobs.

“The repayment schedule for this loan was revised due to the prolonged national economic downturn that severely impacted property and construction industries across the UK. The first repayments were made in March 2024.”

GLAP told the Financial Times it had paid £33m towards its outstanding debts in March, and that its most recent auditor report from this year showed some improvements by management, including minute taking.