London (Parliament Politics Magazine) – Auditors warn that Mayor Sadiq Khan’s London housing fund faces potential taxpayer bailout after failing to meet repayment deadlines for a £300m loan.
The Greater London Authority Land and Property Limited (GLAP), the mayor of London’s property development project, acquired £300m debt when it was formed in 2012 under Boris Johnson, after a consolidation of several public development organizations.
As one of Britain’s major public landholders, the fund is expected to construct thousands of new homes on its land to tackle the country’s ongoing housing shortage.
The Guardian reported that the developer is fully owned by the Greater London Authority, and the loan was supposed to be repaid in 2018.
For the past six years, GLAP has failed to make timely repayments, with only an initial payment made earlier this year, as shown in documents accessed by London Centric and the Financial Times.
The fund manages 635 hectares (1,569 acres) of land, including prime areas like London’s Docklands and the Greenwich Peninsula near the O2, both of which are planned for major development to address the capital’s ongoing housing crisis.
According to internal audit reports from the previous year, there were serious concerns about the fund’s management and decision-making, with auditors highlighting they were not given sufficient explanations for the repeated failure to meet loan deadlines.
The report stated, “No supporting documentation to formally agree the non-repayment of the loan was provided.” It also said, “Minutes of meetings are … not taken showing any decisions made.”
It continued, “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.”
Top officials within the London authority manage the fund, including David Bellamy, chief of staff of Sadiq Khan, and Tom Copley, the deputy mayor for housing, also play a key role in the steering group that makes strategic decisions about the fund.
Auditors also raised worries about whether Sadiq Khan, London’s mayor since 2016, will use funds from his taxpayer-funded support to tackle the housing fund’s debts.
According to a statement from GLAP, the loan repayment schedule was adjusted due to the current national economic downturn, which had a severe impact on the UK’s property and building industries.
GLAP added that it had repaid £33m of its debt in March and that the recent auditor report from this year revealed some improvements in management, such as the adoption of minute-taking.
The Labour government’s target is to construct 1.5 million new homes within five years and to meet the goal they plan to construct 370,000 new homes annually in England.
Britain is grappling with a housing crisis, facing a backlog of 4.3 million homes, particularly in the Greater South East.
London’s target for new homes has been lowered to about 88,000 annually, reduced from previous figures.
According to a property investment website, the gap between the average house price in London, £484,716, and the typical salary of £34,320 (about 14 times higher) shows the affordability crisis in urban housing.