Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Regeneration game: How councils and contractors are transforming estates

During the post-war housebuilding boom, contractors were called upon to construct, demolish and reshape council housing estates. Now, against a backdrop of political austerity, those calls are being heard again.

Calls to raise, scrap and reshape council estates have been answered by contractors since public housing projects proliferated in the post-war boom.

In 2015, against a backdrop of austerity, such calls are gaining volume and frequency once again.

Just before this year’s general election, a study by consultancy Savills arguing for another wave of radical estate regeneration to ease the housing crisis was handed to ministers.

The chair of the government’s new infrastructure commission, Lord Adonis, is on the record as being in support of a radical revamp of hundreds of “undeveloped” estates across London, in a report this year for the Institute for Public Policy Research.

Even the prime minister’s own housing adviser has pushed a similar view: Alex Morton called for a “large-scale programme of estate regeneration” in 2013, the year he joined David Cameron’s office.

Outside of government, councils and housing associations are pinning their hopes on revamping estates for profit to replace public housing grants that have been pared back by the Treasury.

Several authorities, from Richmond-upon-Thames in London to Thurrock in Essex, have put plans in place to rejig their estates and catch the coattails of a recovering economy (see box).

But what risks and rewards are presented by this return to the regeneration game and what is the scale of the market?

A very big prize

Developers reputed for regeneration work are clear this corner of the redevelopment sector has strong potential for growth in the current political and economic climate.

Willmott Dixon Regen chief executive Andrew Telfer says the estate regeneration market is “huge and getting bigger”.

“Councils are looking for ways to dispose of land, raise capital and create housing,” he adds. “And the margins are better than for construction.”

Berkeley Homes also hopes for a new wave of council estate regeneration, given its positive experience revamping the Kidbrooke Estate in Greenwich and Woodberry Down in Hackney (see box).

Creating Kidbrooke Village

The road to the regeneration of Kidbrooke began in 2001 when the 1,900-home estate was earmarked by Greenwich Council for regeneration.

Berkeley was appointed as the preferred development partner for the 1960s estate in 2007.

Since building work began in 2009, 200 homes have been raised each year for ‘Kidbrooke Village’, the estate’s new name.

Berkeley has invested heavily upfront to help recreate a community after the estate was completely demolished to make way for the new development.

A temporary village hub with a five to 10-year lifespan has been created as part of a £36m infrastructure investment that will eventually reach £143m.

Some 1,550 affordable homes are planned for the estate, including 791 socially rented homes, 659 shared-ownership properties and 100 homes sold at discounted market rates.

“At both Kidbrooke and Woodberry, Berkeley has doubled the density and increased the amount of public open space,” says divisional director Karl Whiteman.

“Think about what you could achieve across London if you did that elsewhere. As a way of solving the housing crisis, this is a very big prize.”

Better use of land

The potential size of this “prize” has been known to ministers at the Department for Communities and Local Government for some time.

The DCLG confirmed it had received the report by Savills, which examined the potential of estate regeneration in London and other high-demand areas, such as Brighton, Cambridge and Oxford.

While Whitehall declined to reveal the report’s findings, its central thesis is clear from the published research brief that convinced ministers to commission it: widespread regeneration could create hundreds of thousands of new homes, easing the housing crisis to a substantial extent.

The author of the completed study, Savills director of global research Yolande Barnes, is also reluctant to reveal her findings. But she does not appear to have shifted from her original thesis.

“What is so compelling about housing estates is that their densities are strikingly low,” she tells Construction News.

“In a lot of cases, they make very poor use of land so offer some of the biggest potential for densification and intensification of use, along with improvement of place.

“Local authority housing estates were built when the population of London was declining; the problem they were addressing was housing conditions rather than supply.

“The question now is: how with a rising population can you redensify and urbanise estates without losing community cohesion?”

‘Weird urban fabric’

According to Savills’ original thesis, estate revamps are most effective when radical and well planned. “Regeneration is really an infrastructure project to help mend London’s fabric,” Ms Barnes says.

“But the way it takes place now is to replace tatty old buildings with new shiny buildings. The modernist architecture [of many estates] was anti-streets in form.

“The best outcomes occur by putting in a complete, connected and permeable new street plan with a variety of apartments, terraces and neighbourhood uses”

Yolande Barnes, Savills

“Housing blocks were built at strange angles to disrupt the street pattern. There is quite a lot of unused land, just a weird urban fabric, often quite alien to the surrounding area.

“The best outcomes occur by putting in a complete, connected and permeable new street plan with a variety of apartments, terraces and neighbourhood uses. Estates need connecting to other streets.”

The major reformations urged by Savills, Lord Adonis and Mr Morton are not without their challenges, of course.

They demand demolition of many if not all occupied homes in the old blocks, raising the prospect of considerable friction with residents.

Major revamps can also span decades, requiring substantial investment upfront and long waits for financial returns.

A further challenge is maintaining the momentum and trust of social landlords, councils and any unsettled residents over such an extended period.

Ms Barnes believes the protracted nature of redevelopment renders regen unattractive to housebuilders, which are geared towards quick profits.

“Regeneration requires long-term commitment [but] the construction business model we have worked with for the last 50 years has a short-term view of value”

Yolande Barnes, Savills

“Uplifts in value continue over time, sometimes for quite a long period,” she says.

“Regeneration requires long-term commitment [but] the construction business model we have worked with for the last 50 years has a short-term view of value.”

Such difficulties make regeneration riskier than other kinds of development work, according to Lovell director of business development Peter Quinn.

“It isn’t for the faint-hearted,” he says. “But when you get it right, estate regeneration can be absolutely life-changing.

“The key is managing relationships and expectations; the one with the local authority is absolutely paramount.

“You have to be completely clear on what the outputs are, particularly when you are working hand in glove with the community.”

Long-term game

Developers must also carefully communicate why the numbers and types of homes originally planned for developments alter with market conditions.

“Outputs will change,” Mr Quinn says. “You must communicate all the time in a consistent manner so the community understands why things change.

“We try to do a lot of upfront work before we carry out any physical work.”

Berkeley’s Mr Whiteman points out a further consideration with protracted projects. “Estate regeneration can take up to 25 years,” he says.

“You must communicate all the time in a consistent manner so the community understands why things change”

Peter Quinn, Lovell

“That might be four elections and a couple of property cycles, throughout which you have to keep the partnership strong and the community positive.”

Mr Whiteman says Berkeley is less constrained by the financial risks than other developers because it rarely relies on loan finance.

“We hardly ever gear the business so Berkeley is free to make its own decisions,” he says. “When you are looking at a 20 to 30-year programme, you must take a long view.

“We are happy to make the investment and create a fantastic place. The dividends will come over time.”

Increasingly popular market

If current economic and political conditions continue, developers that have the stomach for estate regeneration look likely to be playing in an increasingly popular sector.

According to Mr Quinn, there is renewed interest in estate regeneration among social landlords.

“There are now signs that there are more opportunities in the market,” he adds. “A lot of estate regeneration was predicated on open market sales to subsidise other parts of the project.

“During the recession that became quite difficult to do; schemes were being put on hold. [Using profits for subsidy] has become easier in the market. Schemes are becoming more viable.”

“There are now signs that there are more opportunities out there in the market”

Peter Quinn, Lovell

The momentum for a new wave of estate regeneration has been building in the political arena for some time, driven by several influential figures in government.

A crucial trigger was the publication of the Create Streets report by the Policy Exchange in 2013.

Co-authored by Mr Morton, who was head of housing, planning & urban policy at the think tank prior to becoming the PM’s housing adviser, it urged councils and the mayor of London to encourage estate regeneration.

It also suggested the government should undertake “a full study of how redeveloping multi-storey estates into streets and houses”, which was effectively put into action with the commissioning of the Savills report.

That report’s thesis was backed by ministers in the Evening Standard in 2014. “Past experience tells us that mere tinkering won’t work,” former communities secretary Eric Pickles told the paper.

“Completely rebuilding traditional streetscapes can provide more housing and commercial space using the same amount of land,” he said.

Controversy in the community

Two social landlords that have embraced radical estate regeneration are Southwark Council and Peabody, the housing association that sponsored the Lord Adonis report for the IPPR.

The ongoing demolition and redevelopment of one Peabody estate, St John’s Hill in south London, embodies the problems Savills identified and sought to address (see box).

How Peabody is reconnecting St John’s Hill to the community

Built in the 1930s, St John’s Hill turns its back on the surrounding streets.

Each residential block looks inwards; all are encircled by a high wall, cutting the estate and its residents off from the wider community.

Like many London social housing estates, it occupies land now considered to be prime. Clapham Junction station is a next-door neighbour.

The estate’s imposing wall has now been earmarked for demolition as part of a £120m revamp of the estate by contractor Sisk.

Under Peabody’s plans, St John’s 353 socially rented flats will be replaced with 528 new homes, a community centre and commercial space.

“St John’s Hill is one of our estates where we recognise that the land use could be improved,” says Peabody senior development manager Cathy Bacon.

“We have pledged to recreate the streetscape with maisonettes of two to three stories and townhouses with flats above them. This follows the design of the surrounding street scene.

“We will open up the estate to pedestrians with a new avenue that will run from Wandsworth Common to north Clapham.”

Peabody has pledged to re-house all existing residents on the new estate while introducing homes for sale on the private market to help pay for homes sold and rented at sub-market rates.

“Some residents are very established,” Ms Bacon adds. “They have been on the estate for 40 years or more and can help to retain a cohesive community.”

The road to the wholesale regeneration of an estate is not always smooth, however, as Southwark Council has discovered to its cost.

The London authority has been accused by some of its residents of “social cleansing” for its efforts to radically transform its estates.

Plans to demolish and rebuild the Aylesbury estate are now wrapped up in a major inquiry, brought by some residents who would prefer it to be refurbished instead. A high fence erected to restrict access to the protestors’ homes encircles some remaining blocks - a stark reminder of the stand-off between protesters and Southwark.

Southwark cabinet member for regeneration Mark Williams is defiant over the council’s position, describing the arguments for refurbishment as “nonsensical”.

“There is no magic money tree; no unlimited supply. The costs would be astronomical [for refurbishment].”

“There is no magic money tree; no unlimited supply. The costs would be astronomical [for refurbishment]”

Mark Williams, Southwark Council

Southwark’s experience does not seem to have diminished its resolve for estate regeneration where it’s deemed necessary by the authority.

It is currently reviewing a major study it commissioned into the condition of all of its estates. Several of those built in the 1950s and 1960s are considered to be at the end of their lives.

Wholesale regeneration might be the “right thing to do” when their condition is poor, Mr Williams says.

Political push

Whether the current support for estate regeneration continues will of course depend on favourable market conditions prevailing.

Another political factor could have a significant effect: the London mayoral election in 2016.

While incumbent Boris Johnson has encouraged councils to redevelop estates, his believes regeneration is sometimes best carried out on “incrementally” rather than wholesale, as Adonis and Savills suggest.

However, his potential Conservative successor, Zac Goldsmith, appears to support the Savills and Adonis thesis.

“Estate regeneration has to be about what’s in the best interests of the existing residents”

Sadiq Khan, Labour mayoral candidate

“A large portion of the 50s and 60s housing estates in London are reaching the end of their lives,” he said in a comment piece for the Daily Telegraph earlier this year.

“There are 3,500 such estates in the capital: if only a fraction were redeveloped… we would generate enough new housing to cater for our needs for many years.”

Speaking to Construction News, Labour candidate Sadiq Khan says he would adopt a more cautious approach to regen.

“There may be occasions when worn-out estates need modernising,” he says.

“But estate regeneration has to be about what’s in the best interests of the existing residents and how we maintain London’s important social and affordable homes.”

Whatever the outcome of the mayoral election, it seems support for a return to regeneration and the benefits it brings will remain strong at a national level at least.

Even so, the controversy around radical revamps and the need to knock down residents’ homes will keep regeneration at the riskier end of developers’ business, despite the size of the potential prize.

Estate regeneration to come

Several councils in London and further afield have begun reviewing their entire portfolios of social housing estates to identify any that would benefit from major regeneration.

Thurrock Council in Essex has started to look at extending its plans to revamp four estates to its portfolio. A council report from June describes many of its estates as “very low” density with underused land and “poor-quality garages”.

Extending regeneration could improve housing for existing residents and create extra homes within estates’ existing footprints. While the housing market in Thurrock had “improved”, the report suggested it remained “fragile”.

The council is in contact with around 20 volume builders, housing associations and developers with an interest in the extended programme.

Kingston-upon-Thames kick-started its first large-scale regeneration programme in June, agreeing a £250,000 budget to work up plans for Cambridge Road, the first of three large estates earmarked for major change.

“Redeveloping our estates offers a unique opportunity to meet increasing demands for more housing while improving the lives of our current residents,” said council papers released in June.

The council admits its plan will require most tenants across the three estates to be re-housed while their homes are replaced. Procurement of contractors is likely to begin in 2017.

Ealing Council identified eight of its 26 housing estates as possessing redevelopment potential in a council paper this year. Councillors asked officers in July to investigate how best to regenerate each one.

Under a ‘redevelopment’ option, estates would be regenerated “whole-scale”. This would be the “the most productive approach”, involving demolition or extensive refurbishment, the council says.

Under a ‘hybrid’ option, the density of estates would be boosted by building on undeveloped land. Councillors expect a full report on the eight estates next spring.

Readers' comments (1)

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.