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Political climate jeopardising estate regeneration plans, sector warns
Sector figures have expressed concern that difficult economic and political circumstances are stalling estate regeneration plans in London.
Speaking to Inside Housing, they said that falling house prices in central London, Brexit and a growing political will against demolition were all stymying regeneration.
It comes days after Clare Kober, leader of Haringey Council, announced her plans to step down after elections in May and leave the decision on whether or not to push ahead with an ambitious £4bn regeneration drive to her successor.
This means the project - known as the Haringey Development Vehicle (HDV) - is almost certain to be scrapped, with a new set of Labour councillors opposed to the plans set to take control of the town hall.
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It follows warnings that changes to central London’s luxury flat market have made it harder to use market sale to cover the extensive costs of regeneration.
This has added to the difficulties around Capco’s plans to demolish two estates in Earl’s Court after the scheme saw its valuation drop from £1.4bn to £1.1bn in February last year.
Neal Hudson, director of Residential Analysts, said: “Central London’s house prices peaked in 2014 and the market has really been struggling. Prices have been falling, turnover’s been falling.
“A lot of the assumptions that went into the models behind [estate regeneration] projects five years ago or so [would be different now]. The reality is looking less rosy than it was.”
Resident opposition to regeneration has also grown, with Haringey’s £4bn development vehicle prompting the deselections of 21 Labour councillors in favour of the proposals. On Tuesday, Claire Kober, leader of Haringey Council, said she would quit after the election and not seek to push through the vehicle.
One regeneration director at a large housing association said politics has made estate regeneration “particularly difficult” at the moment.
They added: “That’s certainly shaping some thinking as to whether to bring schemes forward or not. The one thing you crave in regeneration is stability, because these are long-term investments and we’re making big, long-term commitments.”
Paul Hackett, chair of the G15 group of London housing associations, told Inside Housing: “Political uncertainty can add to potentially abortive costs and those will put many potential players off getting involved in some of these larger, more difficult schemes.”
The UK’s imminent exit from the European Union is also causing concern.
Mr Hackett said: “Because these schemes are multi-phase, multi-year projects, trying to get contractors to price for a scheme where they’re locked into a cost plan for a number of years will be more difficult because of that uncertainty [from Brexit].”
