A bold new era for local government: understanding the changes ahead
- Davitt Jones Bould
- 2 days ago
- 4 min read
A new Davitt Jones Bould survey of over 100 senior local government real estate professionals has found that local government reorganisation (LGR), in which councils in two-tier areas – i.e. those governed at both County and District/Borough/City levels – will be replaced by a single-tier system of unitary authorities, will have a negative impact on regional estates management.
46% of respondents – which included heads of asset teams, in-house lawyers and surveyors – said that they were not confident that the latest devolution updates will improve regional estates management. A further 31% said they were unsure, reflecting the current uncertainty LGR is causing to local authority teams.
One Head of Legal commented that LGR will have a hugely disruptive effect on local authorities, potentially leading to high levels of redundancy.
Participants were also concerned that dissolving smaller, more localised authorities and creating bigger councils that cover larger areas, would have negative impacts on the ability to take important decisions about assets at a local level, the best way to optimise those assets and the way funding would be allocated. Concern was particularly high where rural and city councils are to merge, with respondents worrying that funding allocations, which once made their way to rural and coastal areas, will now be given to cities.
Latest LGR developments
Final proposals for LGR in all two-tier areas were required to be submitted to the Ministry for Housing, Communities and Local Government (MHCLG) by 28th November, but the new unitaries will not be vested immediately after the MHCLG selects the winning proposals.
Instead, the target date for the new unitaries to be vested is 1 April 2027 (for Surrey) and 1 April 2028 (for all other areas). In the meantime, shadow authorities will be created to deal with all interim and transitional matters, including elections and preparing for operations.
Existing authorities will continue to be operational and are required to assist the shadow authority with the transitional arrangements, including property and estates matters.
Our analysis
Our research into the LGR proposals indicate that there are major changes ahead.
There are currently 317 local authorities in England, but considering all submitted LGR proposals, that number could more than half.
Post LGR, the lowest number of councils we could end up with is 150, while the highest is 187. Based on what MHCLG is seeking from proposals, we expect the final number to be closer to the 170 mark.
To illustrate the scale of change, Surrey – which is under an accelerated programme – has had its proposal to reduce its 12 local authorities to just 2 accepted by the government – which goes some way to explain the uncertainty and concerns expressed in the survey.
Impact of LGR on council estate management
There will be significant changes to property and estate matters under LGR. Existing councils will need to take stock of all of their assets and work closely with the shadow authority or shadow authorities, if multiple unitaries are to be created. Key points for analysis include:
Which assets are freehold, leasehold, occupied under licence, tenanted or shared with other parties, or listed as Assets of Community Value?
Which assets generate income streams or investment portfolios that will need to continue?
Which assets are subject to particular liabilities – e.g. contamination, rights of way, third party interests – and how will these liabilities and rights be managed?
Which properties are held for charitable purposes specifically for the benefit of a particular area, and how will this vest?
Which assets need to be transferred to the new unitary? If assets are not needed by the new unitary, should they be sold before or after vesting day?
When do leases expire? When are the break clauses? Do leases need to be assigned and if so, do they need third party consents?
How will any disposal funds be distributed amongst successor authorities?
If land is transferred to more than one successor authority, how will it be held?
Impact of LGR on the wider real estate sector
The speed at which the re-organisations are expected suggests a tough transition ahead, with the potential for adverse impacts on planning services in the short-term. However, the reforms will also unlock significant new opportunities, especially through land and property disposals. For example, where 12 councils become 2, there will no longer be a need for 12 head offices.
Council teams will also need additional capacity support, as they face the difficult job of continuing to provide the full-spectrum of services they currently offer to local communities, while also enabling the transition. The councils that will successfully navigate these changes and thrive in the post-LGR era will need to be strategic, to balance both commercial and community outcomes, and be backed by strong legal advice.
Learn more on our local government devolution hub.
Find out more about Chris here.Â
Chris Kerr (Head of ESG)
Christopher heads up Davitt Jones Bould's Environmental, Social and Governance Group, and also the firm’s Coastal Regeneration SIG. He has a particular focus on biodiversity & natural capital, nature recovery, town and city regeneration projects, coastal regeneration work, charitable organisations and the public sector.