Internal auditor’s report suggests London mayor’s housing fund could require bailout

Mr Khan became mayor of London in 2016. Several of his top aides, including David Bellamy, his chief of staff, and Tom Copley, the deputy mayor for housing, are now directors of the company.

Last week, the London Centric website obtained an internal auditor’s report from December 2023 which raised concerns over the financial administration of the fund.

The documents suggested that GLAP missed six years of repayments on its £300m loan under Mr Khan and failed to keep adequate records about the debt.

In addition, the auditor found a real risk the company could become “unable to meet loan repayments” and require a bailout from the main mayoral budget.

The report said it was unclear who decided to sign off the decision to skip repayments, with no evidence of “supporting documentation to formally agree the non-repayment” and no clear paper trail.

“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,” it said.

After delaying repayment of the loan for years, the company is now returning the cash to the GLA, albeit at a high interest rate. A first repayment of £33.3m took place earlier this year, alongside interest payments of £13.6m.

According to City Hall, the company is now being charged 8.54% interest on £70m of the loan, with the rest at a lower 3.33%.

Neil Garratt, leader of the Conservative Party in the London Assembly, said the state of the company was an example of “maladministration of public assets”.

A City Hall spokesperson explained that GLAP was not trading insolvently, and argued that the failure to repay the loan was instead an “agreed reprofiling of repayments” between two related parties, meaning no documentation was needed.

They added that repayment of the loan was delayed due to the “prolonged national economic downturn that severely impacted property and construction industries across the UK.”

Inside Housing understands that the changes to the loan repayment schedule reflect a focus on cashflow management with a plan to repay the reprofiled debt balances.

The City Hall spokesperson said: “The mayor is working closely with GLAP 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 has been 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.”

The reports came after London experienced a steep drop-off in affordable housebuilding. Just 582 grant-funded affordable homes were started and 2,697 were completed in the capital in the first half of the 2024-25 financial year, according to the GLA.