Local government reorganisation (LGR) and the creation of combined authorities (CAs) is one of the most important changes to local government in a generation. For councils and their partners, this transition requires more than just administrative alignment. A fundamental reappraisal of how services like housing development are planned, funded and delivered is also needed.

There is a clear mandate to address the national housing crisis while also bringing in major changes like the new Social Housing (Regulation) Act. This creates unprecedented strategic opportunities as well as complex delivery risks that need to be carefully managed.

The strategic shift to combined authorities as housing drivers

The move to larger local government structures and devolving power to combined authorities is fundamentally changing the approach to the housing crisis. Housing functions that have historically been split into two-tier systems are being centralised. This creates a new way of looking at the longstanding imbalance of supply and demand in the housing market.

1. Planning and spatial strategy at scale

The main benefit of combined authorities is being able to think and plan at a sub-regional scale:

• New authorities must harmonise existing local plans. This may cause short-term delays but will ultimately lead to a clearer, wider vision. The creation of a spatial development strategy at the CA level ensures that housing targets are aligned with wider economic growth, infrastructure and transport plans. This holistic view is needed to unlock large-scale development sites.
• Mayors within CAs are being granted new development management powers to speed up strategic site selection. These include the ability to ‘call in’ strategically important planning applications. This streamlined, top-down co-ordination could accelerate housing delivery and ensure major projects are not slowed down at the local level.

2. Funding and investment

The financial influence of CAs is a game-changer for housing. The change from bidding for fragmented central government pots to securing integrated and consolidated funding through deals like the ‘trailblazers’ (eg Greater Manchester and the West Midlands) provides:

• Secure, long-term investment as CAs have the capacity to establish bespoke housing investment funds and set the strategy direction for the Affordable Home Programme (AHP) grant funding. This local control, alongside the commitment of the £39m Social and Affordable Homes Programme (SAHP), empowers authorities to increase the supply of Social Rent homes.
• Regeneration of brownfield sites with the significant, dedicated funding that is often included in devolution agreements. This allows CAs to bring challenging or lower-value sites forward for development and make sure housing is located where it is most needed.

Navigating the regulatory and financial complexity in housing delivery

While the strategic vision of LGR is ambitious, the operational reality for housing teams is one of technical and financial complexity. This is particularly true for affordable housing commitments.

The impact on social housing quality under LGR

The LGR process is taking place alongside the implementation of the Social Housing (Regulation) Act. This means new housing teams will immediately need to comply with:

• Enhanced regulatory standards: The regulator has the power to conduct routine assessments and issue substantial fines. New combined entities need to audit and standardise their existing social housing stock across their newly expanded geographic areas.
• Tenant empowerment: The Act gives tenants a greater right to solicit information and quickly address hazards. New authorities must merge and standardise their complaints and redress processes to meet these new expectations.

Section 106 agreements and affordable housing challenges

An important financial consideration during LGR is what will happen to affordable housing contributions secured through Section 106 (S106) agreements:

• Different predecessor councils have varying S106 policies, affordable housing targets and approaches to negotiating contributions. The new authority must quickly establish a consistent, evidence-based policy framework (often guided by the new National Planning Policy Framework (NPPF)) to protect the delivery pipeline.
• There is a real concern that proposed planning reforms, such as replacing S106 with a National Infrastructure Levy, could weaken affordable housing commitments. Councils must ensure that the creation of new planning bodies does not dilute the influence or expertise needed to negotiate and monitor these financial agreements effectively.

Prioritising housing delivery tasks

Despite this complexity and change, the immediate priority for new combined authorities and reorganised councils remains the same. They must translate strategic vision into tangible, deliverable housing projects while maintaining fiscal discipline. To do this, they need to focus on three critical areas:

1. Financial and resource alignment

• Conducting immediate budget reallocation modelling will allow new authorities to develop financial models that forecast restructuring costs against the impact on frontline housing budgets. This should include stress-testing the ability to leverage new funding streams, such as the SAHP.
• Standardising housing revenue accounts (HRAs) to enable accurate reporting, control debt and ensure the long-term financial viability of housing stock.

2. Regulatory compliance and governance

• Executing a cross-boundary compliance audit of all existing social housing stock to show compliance with the Social Housing (Regulation) Act.
• Establishing a single, efficient and transparent resident complaints and redress process that empowers tenants and complies with the new legislation.

3. Planning and delivery safeguards

• Harmonising the previous council’s S106 policies and affordable housing targets. Despite all this change, new planning teams must retain the in-house expertise or external support necessary to negotiate robust developer contributions.
• Undertaking strategic viability assessments on key strategic housing sites to ensure that affordable housing commitments and wider infrastructure needs are protected.

Next steps for housing development under LGR

LGR and the rise of CAs are supercharging the housing delivery environment. By successfully joining forces and using their new powers and funding, these new authorities have a real chance to build the affordable, high-quality homes people need.

To get a copy of RSM’s Risk and Preparedness Toolkit and see how we can help you navigate LGR and devolution, contact us today.

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