Demolition of a terrace of 16 derelict houses so that the site can be leased to developers to turn into private flats has been labelled “sickening” by an environmental campaigner.

The row of former homes from 48 to 78 Dalston Lane, which date back to before the turn of the 19th century, were declared “remarkable survivors of Georgian architecture” by English Heritage in 2005.

Hackney Council initially planned to knock down the back of the houses and retain the front facades.

However, it decided at the end of last year to knock down all the properties and the shops in front due to “structural instability”. Demolition work started yesterday.

The site will then be leased out for 125 years to property developer Murphy to convert into 44 homes – but there are no plans for affordable homes and the development will also contain 1,000 square metres of retail space. The contract is said to be worth £2.38 million but the council refused to reveal exactly how much saying it was “commercially sensitive” information.

Open Dalston founder and lawyer Bill Parry-Davies has been running a campaign for the past 10 years to save the buildings.

He said the council first inherited the houses in 1984 before refusing a shopkeeper’s offer to buy them, and then sold them to an off-shore development company for £1.8million in 2002.

Two terraces were demolished following fires before the council bought the site in 2010 for £3.8m – nearly double what the council originally sold it for.

Mr Parry-Davies said: “The council claims to champion our historic environment and local businesses, but in fact both have been irresponsibly run down and destroyed in Dalston Lane by the dead hand of bureaucracy. All at public expense and with no affordable housing – it’s sickening.”

A spokesman from civic group, The Hackney Society, also condemned the proposals, saying: “We are concerned with Hackney’s management of this asset and failure to explain their plans clearly and transparently with an open public consultation. We are urging them to stop until they have had that discussion.”

A council spokesman said: “Due to structural instability, it will not be possible to keep the entire façade, though where possible shopfronts and brickwork will be reused.”

The council maintains that an affordable housing element would make redevelopment financially unviable.