Taxpayers may be on the hook for a £300 million government loan after Sadiq Khan’s housing development fund, Greater London Authority Land and Property Limited (GLAP), repeatedly failed to meet repayment deadlines.
GLAP, one of the largest public landowners in the UK, was established in 2012 during Boris Johnson’s tenure as London Mayor. The fund inherited the substantial debt following the merger of other public development bodies. Tasked with easing London’s housing crisis, GLAP owns 635 hectares of land in high-potential areas such as the London Docklands and Greenwich Peninsula.
The repayment of the loan was initially due in 2018, but over the past six years, GLAP has consistently missed deadlines. It made its first significant payment of £33 million earlier this year, according to documents obtained by the London Centric website.
Internal audit reports have raised red flags about the fund’s governance and management. “No supporting documentation to formally agree the non-repayment of the loan was provided,” one report stated.
The documents further revealed that critical decisions lacked formal approval, with minutes of key meetings either not recorded or absent altogether.
“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 auditors warned.
GLAP is led by top figures from London’s administration, including Mayor Khan’s chief of staff, David Bellamy, and Deputy Mayor for Housing, Tom Copley. The fund operates as a commercial subsidiary of the Greater London Authority (GLA) and plays a central role in the city’s housing strategy.
However, concerns are mounting over whether Khan’s administration will resort to taxpayer funds to cover the debts. According to a report from the, auditors are scrutinizing whether financial support from the GLA budget might eventually be used to settle the outstanding amount.
In response to the scrutiny, GLAP attributed the delayed repayments to external economic factors. “Due to the prolonged national economic downturn that severely impacted property and construction industries across the UK,” the fund said, its loan repayment schedule had to be revised.
Despite its challenges, GLAP noted progress in addressing some of the auditors’ concerns. It cited improvements in management practices, including the proper recording of meeting minutes, as outlined in its most recent audit report.
Land Development Potential
With extensive holdings in prime redevelopment areas, GLAP’s portfolio is considered vital to London’s long-term housing plans.
However, delays in repurposing these assets have raised doubts about the fund’s ability to deliver on its mandate.
The portfolio’s estimated value stands at £302.4 million, supported by net assets of £190.9 million and a turnover of £30.9 million as of March 2023.
Current funding strategies include partnerships with major developers through frameworks like the Property Partnership Framework, which streamlines collaboration for housing and commercial projects.
emphasis on brownfield site redevelopment aligns with the Mayor’s objectives to tackle London’s housing crisis while promoting economic growth and sustainability.
Projections indicate a continued focus on mixed-use developments in areas like the Royal Docks and Greenwich Peninsula, enhancing community infrastructure and job creation over the next decade.
While GLAP has committed to addressing its management shortcomings, questions persist over how the remaining debt will be cleared and whether taxpayers will bear the burden.
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