The budget for reopening a historic former cinema as a modern theatre has risen by more than £11 million in the two years since the project began.

In January 2019, Waltham Forest Council’s cabinet agreed to spend £19.95 million on restoring and redeveloping the Grade 2 listed former EMD cinema building in Hoe Street into a 1,000-seat comedy and theatre venue.

The following January, council leaders increased the budget by more than £5 million after a survey of the building’s interior revealed it was in worse condition than originally expected.

At a meeting on Thursday, July 8 another increase was agreed, also of more than £5 million, bringing the new total budget for the project to just under £31.1 million.

Read more: Hoe Street former EMD cinema project given planning permission

While councillors discussed the decision in private, a report prepared for the meeting explained “significant external factors driven by Covid and Brexit” had raised the cost of construction.

These include the UK-wide increase in the price of construction materials post-lockdown, the disruption of the pandemic itself, and supply and workforce shortages caused by Brexit.

The first budget increase was triggered by issues inside the building, including asbestos, leaks and corrosion, discovered during initial surveys. The report notes that further issues, not evident from these surveys, have since been found. 

The report explains: “The estimated construction cost of the project at acquisition was based upon a feasibility study demonstrating that refurbishment and conversion of the derelict cinema to a live theatre is achievable. 

“This proposal had not been subject to a detailed development of the council’s and theatre operator’s brief, particularly the council’s requirement for the building to support a programme of education, training and community engagement activities for local people.”

The council will borrow more than £4 million to fund the latest increase, with the remaining money sourced from Historic England, the Carbon Offset Fund and money paid to the council by other developers.

When it opens, the venue will be run by Soho Theatre and is expected to boost the local economy by between £34 million and £52 million in the next decade.

The council purchased the building in May 2019 from pub chain Antic, a few months after its bar and venue Mirth, Marvel and Maud – operating from the cinema’s foyer – received the lowest possible hygiene score.

Read more: Council EMD decision "redundant" say campaigners

Antic purchased the building five years earlier from the Universal Church of the Kingdom of God, which hoped to convert it into a place of worship but was repeatedly refused planning permission by the council.

The Walthamstow venue was last used as a cinema in 2003, having changed hands a number of times since it first opened in the 1930s as The Granada. It once also hosted live music, including a gig by The Beatles in the 1960s.

At the same cabinet meeting this week, councillors were asked to note that the refurbishment of Waltham Forest Town Hall and creation of Fellowship Square had gone £3.4m over budget. However, the report on this cost increase was not made public because it relates to the council’s “financial or business affairs”.