Financial crisis threatens Olympic village funding

The problem of securing funding for the £1.2bn Olympic village has been worsened by the financial market turmoil over the past week, the Olympic Delivery Authority (ODA) chairman, John Armitt, admitted today.

Speaking to Building at a fringe event at the Labour Party conference, Armitt said: "The reality is that the situation is changing by the day. There was a certain amount of finance available six months ago, less two months ago and the reality is there was probably even less last week. Getting any form of loan from the private sector at the moment is very difficult."

The ODA last month struck an interim deal with Lend Lease on the village, enabling the firm to act as contractor without an equity stake for an interim period until a final funding agreement can be reached, which would see Lend Lease part fund the project.

Getting any form of loan from the private sector at the moment is very difficult

John Armitt

However, the tightening of the financial markets and reluctance to lend, particularly to the housing sector, has thrown doubt over Lend Lease's ability to finance the scheme.

Armitt said that the ODA was still forecasting a deal "around the end of the year", but added: "It's very difficult in the current market."

The ODA's chairman said that the organisation believed it so far had "more than half" of the necessary funding secured for the project. When asked what the contingency would be should Lend Lease fail to secure the financing originally anticipated, Armitt said: "We are in discussions with Lend Lease and its banks, and we are in discussions with government, and an RSL [registered social landlord] is in daily negotiations with us."