Purpose

Cabinet is recommended to approve the revised
delivery proposals for Avenue Road estate regeneration.
 

Content

Cabinet:
 
(1)           
approved that the council progress due diligence
with the intention of entering into the proposed model with the
institutional investment partner to deliver Phase 1 of Avenue Road
regeneration;

 
(2)           
delegate authority to enter into Heads of Terms with the
institutional investment partner to the Strategic Director, Place
and the Strategic Director, Resources.
 
(3)           
approved, as part of the Heads of Terms, entering into of the Cost
Underwrite Agreement with the institutional funder;
 
(4)           
approved a demolition notice is served on Avenue Road estate in
July 2026 when the previous demolition notice expires;
 
(5)           
noted the proposals for a comprehensive resident
engagement exercise to inform residents of revisions to the
regeneration proposals;
 
(6)           
noted that the finalised institutional investment
and financial models will return to Cabinet in late Summer 2026 for
final approval; and
 
(7)           
noted the proposals to deliver Phase 2 of the regeneration.
 

Options & Alternatives Considered

Do minimum / Refurbishment programme

If comprehensive regeneration was not taken forward, a
refurbishment programme would be required, within the financial
parameters of the HRA. This approach would ensure all units are
lettable in the short to medium term and that the estate meets all
statutory standards but would not deliver modern new homes or
improved public realm for existing residents or provide the
additional housing essential to the borough in the future. The
Outline Business Case demonstrates that either a comprehensive
refurbishment programme or works to maintain the estate to minimum
statutory standards would be more costly to the council than the
proposed approach to deliver the regeneration.

A significant level of GLA grant has already been committed to the
scheme and drawn down by the council and this would need to be
returned in the event that the scheme did not proceed.

To not progress the scheme now would stall the site and
indefinitely delay delivery, which would have a significant impact
on residents living at Avenue Road estate and the number of new
homes delivered in the borough in the coming years.

Demolition / Mothball scheme

The final option for the estate would be for the council to fully
decant existing residents and demolish the current blocks. This
option would avoid incurring the ongoing maintenance costs to keep
the current estate habitable and mothball the scheme until such a
time as economic conditions and the council’s financial
position allowed a full regeneration to be considered again.

This option is not a viable consideration for the council as it
would require rehousing all of the current households on Avenue
Road estate and would reduce the council’s housing stock at a
time when housing supply is in desperate need in the borough. It
does not deliver the benefits of regeneration that residents have
voted for.

Alternative Delivery Models

Development Agreement

The council has previously employed this model when
undertaking the regeneration of an existing housing estate, it
involves working in partnership with a developer in a way that
limits the council’s exposure to wider market risk and fixes
the council’s capital contribution, whilst guaranteeing the
delivery of new social homes.

In this model there is generally a capital
contribution required from the council to make a scheme viable.
Where the capital contribution can be shown to be both financially
viable for the council and to provide significant social value in
terms of new homes and benefits to the wider community, as well as
additional housing, then a scheme will be progressed.
However, the current proposals for the full Avenue Road scheme are
not financially viable for the council to deliver through this
model due to the level of capital contribution required from the
council.

Self-Delivery

The potential for the council to self-deliver Block A2 using GLA
grant apportioned to the 116 social units has been investigated.
However, it has been determined that this would be unaffordable to
the council as it would require a significant capital contribution
on top of the grant that has been allocated to the scheme.

The council does not benefit from the same economies of scale and
supply chain relationships as major developers and therefore the
build cost would be significantly increased were the council to
deliver the scheme itself, there would also be added risk for the
council from fluctuations in the wider economic market. The
proposed approach mitigates this by transferring a significant part
of the development and construction risk to a third party.