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

Keep knowledgeable with free updates

Merely register at UK possession myFT Digest – delivered straight to your inbox.

Sadiq Khan’s flagship London housing fund might have a bailout after repeatedly lacking funds on a £300m state mortgage and failing to maintain debt data , warned his listeners.

GLA Land and Property (GLAP) Restricted, the London the mayor’s actual property growth automobile, has repeatedly missed mortgage compensation deadlines over the previous six years and solely made its first fee this 12 months.

The corporate, which is owned by the Better London Authority, might have monetary “help” from the taxpayer-funded Mayor’s Price range to repay the mortgage in full, in keeping with a report by inner auditors printed this month.

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

The utility automobile was born from the merger of earlier public growth our bodies and inherited the £300 million legal responsibility owed to the Better London Authority when it was established.

The cash was as a consequence of be repaid beginning in 2018, however GLAP made no funds in successive years.

The GLAP is made up of GLA officers, whereas Khan’s chief of employees, David Bellamy, and Tom Copley, London’s deputy mayor for housing, sit on the steering group which makes government choices concerning the fund.

The GLA’s inner auditors raised considerations final 12 months about mismanagement and poor decision-making on the firm, and stated that they had “not obtained proof” of why for which repayments had been repeatedly missed, in keeping with a December 2023 audit report.

“No supporting paperwork formally confirming the non-repayment of the mortgage had been offered,” the report stated. He added that “the minutes of the conferences are . . . not taken, which reveals that no resolution has been taken.”

The 2023 report warned: “There’s a threat that choices made concerning the mortgage haven’t been formally agreed, documented and processes should not in place for threat administration. »

Redacted copies of the unpublished 2023 and 2024 paperwork are printed on the Mayor of London’s web site. Full, unredacted variations of the reviews had been shared with the Monetary Instances by the London Centric web site.

GLAP stated it had paid £33.3m for its excellent loans in March this 12 months, and this 12 months’s auditors’ report says some administration enhancements have been made, together with minute-taking.

The fund – which is likely one of the largest public sector landowners within the UK – goals to construct hundreds of latest houses on the mayor’s land. It’s the industrial subsidiary of GLA.

London should double its annual housing provide to fulfill its official housing targets, even after Britain’s new Labor authorities decreased the capital’s goal by 10 p.c.

The UK authorities desires to extend housebuilding to the best stage in a long time, constructing 1.5 million houses over 5 years. The variety of new houses in England fell by 6 per cent to 221,070 within the 12 months ended March.

The GLA stated 13,460 houses had been accomplished throughout GLAP’s portfolio between 2016 and March this 12 months.

He added that the mortgage compensation schedule had been revised “as a result of extended nationwide financial downturn which has severely affected the property and development sectors throughout the UK”.

The years between 2018, when loans had been as a consequence of begin being repaid, and the Covid-19 pandemic noticed the best stage of latest housing deliveries in England for the reason that 2008 monetary disaster.