Many local authorities act as trustees of charities, often of public facilities such as recreation grounds and public gardens; concert halls and buildings of historic interest; swimming pools and war memorials.
– David Holdsworth, Chief Executive of the Charity Commission
Introduction
March 2026 is set to see one of the biggest overhauls in local governance in a very long time, with the proposed process of devolution and creation of the concept of a Strategic Authority as well as the unitarisation of the traditional two-tier local authority structure into single-tier unitary authorities, as local government reorganisation (LGR) takes effect.
The anticipated changes
A major element of the anticipated changes is the creation of the concept of Strategic Authorities. This will unite multiple local authorities covering a large geographic area into Strategic Authorities which will be led by elected mayors.
Another key element to the reorganisation plans is to create single local government authorities which will be responsible for all local services within a wider area, as opposed to the current two-tier system where a county council and one or more district or borough councils share the responsibility.
How could the proposed changes affect charity property?
We recently shared an article on the impact of the anticipated changes for heritage organisations. Charities in general, and especially those who work closely with district or county councils or who have local authorities acting as trustee (whether as holding or managing trustee), should similarly take note of the LGR proposals.
As part of the shift to a Strategic Authority and single-tier system, we will see assets (including property) transfer from district and borough councils to the new unitary authority. The transfer will eventually happen by statutory vesting but, in the lead-up to this, the process will require successor councils to take stock of all property assets in their remit, identify property that is surplus to the exercise of their functions and arrange for that surplus land and property to be disposed of.
How is this relevant to charities you may ask, and how does this affect charity property in particular?
Local authorities as trustees
Significant numbers of local authorities are trustees of charities, whether in a holding trustee capacity of the property or as managing trustee. This might be seen following a donation of land or property to a local authority in a Will, such as, to use the property for charitable purposes such as open spaces, playing fields, theatres and libraries for example. Or, it may be historic, for example giving the council some formal connection to the charity following significant funding.
The LGR process, which is already well underway, will require the successor council to identify any property that is surplus to its requirements and arrange for it to be disposed of. It isn’t entirely clear what this will mean for charity property owned by a charitable trust, for example where an affected council is the trustee and legal title holder on behalf of a charitable trust. Charities are advised to keep a watchful eye on any developments and take stock of their assets as a matter of priority.
Additionally, the changes may necessitate updates to charity governing documents which refer to particular areas of benefit. If a local authority is a trustee of a charity which owns charity property, the local authority would be required to manage the property in accordance with the charitable purposes in its trustee capacity and be subject to the same trustee responsibilities, including ensuring that the charity is complying with its governing document and the law. This could present an issue if, for example, the charity’s governing document defines the area which the charity is to benefit and this refers to one of the authorities that merges into the new unitary authority. It isn’t clear how such matters will be dealt with, however charities may need to consider updating their governing documents in preparation.
Practical difficulties may also arise where title to charity property is vested in the local authority as a holding or a custodian trustee, which is often the case for older unincorporated charities. The changeover to a new unitary authority may well result in confusion about who has taken over this function, and if there is an ongoing property transaction this could be delayed by uncertainty over who holds title, who must sign documents and how the Land Registry title will be updated. This is another “watch this space” item!
Charities with local authorities as trustees need to consider this form of trusteeship at all stages as a local authority could merge, expand or cease to exist at any time. However, now more than ever, the scale of wholesale LGR highlights the considerations charities should be taking surrounding local authority trusteeship. Indeed, David Holdsworth, Chief Executive of the Charity Commission wrote an open letter in August 2024 emphasising the importance of local authorities understanding which of the assets they manage or own are charitable. He said “the letter was addressed to local authorities, but it is important local charity trustees also play their part in understanding how their assets are owned”.
Practical challenges
The substantial nature of the LGR project is likely to impact on charities in a number of ways:
Funding – changes in local authority structures may impact grant availability and commissioning arrangements.
Planning and projects – transitional arrangements could lead to delays or require adjustments to existing plans.
Personnel and skills – shifts in responsibilities and priorities may create gaps in expertise or require new skill sets for the new authorities to navigate.
What can charities do to prepare for the changes?
Charities should start considering how these changes might influence their operations and explore strategies to stay resilient during this period of transition. As always, maintaining communication and relationships will be essential.
Charities are also advised to take stock during this period ahead of March and assess their property portfolios in light of the proposed changes.
It isn’t clear whether the reorganisation order will include specific details on how charity property that is intertwined with a local authority will be dealt with. The shakeup of the local governance structure will require considerable strategic planning on a number of fronts. Unincorporated charities could look to vest their property that may be affected in the Official Custodian for Charities. This would vest the legal title in the property in the name of the Official Custodian on behalf of the trustees and reduce the administrative burden that is likely to follow the changes. For more information on the Official Custodian for Charities read our article.
The true scale of LGR and how this will directly affect charity property linked to local authorities will unfold as the process gathers pace, but now is the time for charities to get their “ducks in a row” and prepare for the future landscape.
At Birketts we are closely involved with the process of LGR in a number of ways, so if you have any queries or would like to consider your options regarding your charity’s property please do get in touch. Our public sector team also has a dedicated page for Devolution and Local Government Reorganisation with the latest developments.
Key Contacts
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2026.