Restoring the Victorian Ladywell Playtower in Lewisham will cost an extra £1.7 million.
The “significant” rise in costs comes after surveyors found an array of unforeseen issues such as rotting timber and asbestos.
New structural support, basement waterproofing, water and electric upgrades, and repairing brick work, drains and roof coverings will also add to the cost.
Originally it was estimated the restoration of the Grade II listed Playtower, built as a public swimming baths in 1884, would cost £4.5 million but that figure has now risen to £6.2 million.
Developer Guildmore, in partnership with Curzon Cinemas, bought the years-derelict Playtower in 2017.
Plans for the site originally included a nursery and step-down care facility but this was dropped after few residents showed support for it.
The space will now be used for extra flats – 33 up from from the initial 21 – which the council says will mitigate the extra costs.
Councillors approved the changes at Mayor and Cabinet last night, as well as an offer from Curzon to give discounted cinema tickets to Lewisham Local Card holders, which rewards local volunteers.