BARRATT HOLMES, housing correspondent, identifies some troubling similarities between the collapse of Croydon’s failed housing company and recent auditors’ warnings over a GLA-owned development firm
Bricking it: London Mayor Sadiq Khan is encountering significant problems over house-building
A housing company established by the Greater London Authority which has received £300million in loans of public money may require a bailout from London Mayor Sadiq Khan’s already stretched budget, after missing its repayments and failing to keep proper records.
That’s the stark warning from GLA auditors. It is one which ought ring a few alarm bells for anyone familiar with the Reports In The Public Interest issued four years ago by Grant Thornton into Croydon Council’s affairs and its failed housing company, Brick by Brick.
GLA Land and Property Ltd owns a vast amount of land in Docklands and on the Greenwich Peninsula, prime property for development into tens of thousands of homes, but where projects have long been stalled. The fund — which is one of the largest public sector land owners in the country — is a commercial subsidiary of GLA.
The story was uncovered by London Centric, the capital new capital news website, which defied City Hall secrecy to “unredact” key paragraphs from an official report published on the London Mayor’s website about the flagship development fund.
The company may require financial “support” from Mayor Khan’s tax-payer funded budget to fully repay the loan, according to an internal auditors’ report, according to the Financial Times.
GLA Land and Property was set up in 2012 when Boris Johnson was London Mayor.
Land banks: the massive Thames side sites owned by GLA Land and Property, but where building work has only progressed very slowly
It owns more than 1,500 acres of real estate. The commercial vehicle was created from the merger of previous public development bodies and inherited the £300million liability owed to the GLA when it was formed.
The money was due to be repaid from 2018, but GLA Land and Property failed to make any payments over successive years. It was late repayments from Brick by Brick that forced Croydon Council into effective bankruptcy in 2020.
GLA Land and Property is staffed by GLA officials. Mayor Khan’s chief of staff David Bellamy and Tom Copley, the deputy mayor for housing, sit on its steering group.
When Croydon Council established Brick by Brick as its housing company in 2015, it staffed the fledgling development company with council employees and lent it £200million. Senior council directors sat on its board of directors, creating significant conflicts of interest, as confirmed by the recently released Kroll Report.
Concerns over GLA Land and Property were raised by City Hall’s internal auditors last year, who said they were “not provided with evidence” why repayments were repeatedly missed.
“No supporting documentation to formally agree the non-repayment of the loan was provided,” the report said. It added that “minutes of meetings are… not taken showing any decisions made”.
At City Hall, their 2023 audit report warned: “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.” Sound familiar?
GLA Land and Property said it paid £33.3million towards its outstanding loans in March this year, and the auditors’ report from this year said some management improvements had been made, including the taking of minutes. Which is nice.
London needs to double its annual housing supply in order to hit its targets, even after the new Labour government reduced the capital’s target by 10%.
The GLA told the Financial Times that 13,460 homes were completed within GLA Land and Property’s portfolio from 2016 to March of this year.
It added the repayment schedule for the loan was revised “due to the prolonged national economic downturn that severely impacted property and construction industries across the UK”.
Our Kroll Report archive…
Read more: Negrini doctored specialist reports and withheld finance details
Read more: After four-year delay, council to submit complaint reports
Read more: Police drop all investigations into council’s financial collapse
Read more: CEO Negrini’s long campaign to shut down Inside Croydon
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
- Our comments section on every report provides all readers with an immediate “right of reply” on all our content. Our comments policy can be read by clicking here
