Assembly hears financial constraints drive the decision to demolish

17 June 2014

The London Assembly’s Housing Committee heard today how financial constraints are leading boroughs and developers towards deciding to demolish and rebuild social housing estates rather than refurbishing existing properties.

For example, housing estates which undergo new build programmes are not subject to VAT. This 20 per cent increase on costs can disincentivise decision makers from opportunities to refurbish. Also constraints such as the borrowing cap can limit the boroughs’ capacity to envision large regeneration projects.

Most of London’s social housing estate renewal programmes are a combination of refurbish and rebuild. However government policies such as VAT on refurbishment and the borrowing cap imposed on borough’s housing investment is having undue influence over strategic home improvement decisions.

Darren Johnson, Chair of the Housing Committee said,

“There is a juggling act in weighing up the costs and benefits for each side of the regeneration debate, including the needs of residents, environmental sustainability and financial considerations.

“We heard how boroughs need to comply with funding conditions opposed to focusing on a long term strategy that works for their residents.

“There needs to be a greater understanding of these impacts to ensure social landlords can make the most out of their resources, to improve and maintain London’s housing stock”.

Today the Committee met with representatives of London boroughs, housing associations and academics to examine how decisions are made to refurbish or demolish and rebuild dilapidated social housing estates in London. A second meeting will be held in July to examine how lease holders are impacted by social housing estate renewal.

Notes to editors

  1. Darren Johnson AM, Chair of the Housing Committee is available for interview. See contact details below.
  2. As well as investigating issues that matter to Londoners, the London Assembly acts as a check and a balance on the Mayor.

For media enquiries, please contact Alice Andrewartha on 020 7983 4603. For out of hours media enquiries, call 020 7983 4000 and ask for the London Assembly duty