“The private sector often sees process; the public sector sees accountability. Robust transactions and relationships are those where both sides treat the other's practices as part of the deal, not an obstacle to it.”
Leo Stevens
Partner
Contents
Remember the “best consideration” rule
Watch for procurement triggers and specific hurdles around bribery and corruption
Watch for subsidy control triggers
Keep the planning hat and the landowner hat separate
Do not assume your standard precedent will be used
Check the title with public sector history in mind
Local authorities and other public bodies do not sell land, grant leases or enter into agreements quite like anyone else. They are ‘creatures of statute’, accountable to their members, auditors and community in ways that private parties are not, and that shapes the rhythm of transactions from the outset.
The public and private sides of the table do not always start from the same place, and mutual wariness is nothing new. Conversely, across a market as genuinely diverse as affordable housing, and the wider living sectors, what brings parties together is a shared ambition to rise above traditional dividing lines and deliver new homes and infrastructure – reflected in the current national growth and devolution agendas, as well as the increasing appetite amongst private investors to back residential tenures for the long term.
Understanding how public bodies work, and why, is one of the fastest ways to help shared ambitions produce tangible results. This edition of It's the Law sets out ten things worth keeping front of mind.
Additionally, lots of the matters we mention here in brief terms will be the subject of their own It’s the law note – watch out for future editions, including judicial review in the planning context and compulsory purchase powers.
Authors
Leo Stevens
Partner
Caroline Mostowfi
Partner
Kris Kelliher
Partner
Katie Maguire
Partner
Ben Halsey
Knowledge Development Lawyer
Serena Wan
Senior Associate
The Top ten
1. Know who is holding the pen
Officers negotiate day to day, but authority to bind the public authority usually sits with a defined decision-maker under the scheme of delegation – a committee, a cabinet member or, for larger transactions, full council. That structure exists to protect public money and public trust, so it is worth treating it as part of how the deal gets done rather than an obstacle to it. For anything significant, ask early for evidence of the relevant decision, so everyone is working from certainty rather than assumption. We consider how this impacts on project timetables below.
Local authorities also have a general power of competence under the Localism Act 2011, giving them broad scope to act as an individual generally could, provided they stay within the law and their usual public law duties. That power has since been extended to combined authorities, combined county authorities and their mayors, which we come back to in the bonus point below.
It is worth remembering too that public bodies are subject to public and administrative law more widely, and that a decision taken outside the proper process can be open to judicial review as well as internal challenge – something that comes up particularly often in the planning context. Housing associations and other registered providers can themselves be treated as functional public authorities, including for Human Rights Act purposes in some of their activities, and which is also worth bearing in mind when working out where procurement or subsidy control lines fall.
2. Remember the “best consideration” rule
Under section 123 of the Local Government Act 1972 (and equivalent provisions for other public bodies), a local authority must generally secure the best consideration reasonably obtainable for land it disposes of, unless a specific exemption or general consent applies. That is another reflection of a genuine duty to the public purse, and it is worth building this specific valuation process and culture into the timetable from the outset rather than treating it as a late add-on.
3. Watch for procurement triggers and specific hurdles around bribery and corruption
Development agreements, regeneration deals and joint ventures with a public body can engage procurement rules even where nothing that looks like a conventional contract award is happening. The Procurement Act 2023 regime exists to keep public spending open and fair, which is very much in the sector's shared interest.
Bribery and corruption risk sits close behind procurement, particularly where a project involves land value uplift, planning consents, or the appointment of contractors and consultants alongside a public body. The Bribery Act 2010 applies regardless of whether the counterparty is public or private, and its corporate offence of failing to prevent bribery (section 7) makes adequate procedures a live issue for any organisation involved, not just individuals. Hospitality, land deals structured to benefit a decision-maker, and success fees tied to planning or funding outcomes are all examples of areas that tend to attract scrutiny.
Experienced parties will usually anticipate these issues:
- Checking early on whether formal procurement processes apply, factoring these into the overall programme.
- Building meaningful due diligence and paper trails into their governance procedures throughout a matter, as opposed to treating such issues as a one-time-only box-ticking exercise after heads of terms are signed.
4. Watch for subsidy control triggers
Grant funding, favourable land terms and other financial support from a public body can also engage the Subsidy Control Act 2022, particularly on regeneration and housing schemes. Again, undertaking sufficiently forensic checks (and recording conclusions) about whether an arrangement counts as a subsidy, and if so, how it is categorised, helps both sides move forward with confidence rather than having to unpick things later.
A word of warning, be sure to keep in mind the original validation for the agreed transaction price and any related consideration (non-cash etc.) and specifically reflect back on this in the event that commercial terms change during the course of parties’ dealings with one another, as this might mean that the subsidy rules also need to be revisited. In this, and other matters, ensure that lawyers (in-house or external ones) and their parties are clear who is monitoring such matters and what conclusion has been arrived at - ultimately, it will not be in anyone’s interest for an issue of this sort to get missed.
5. Keep the planning hat and the landowner hat separate
Many councils are both landowner and planning authority on the same scheme and often hold other public duties in parallel too – highways, housing, environmental health and more – all of which are rightly kept separate from one another, with different officers and decision routes for each. That separation protects the integrity of every process, so it is worth not reading too much into a positive conversation in one capacity as a signal of the authority's position in another.
Local authorities also have a distinct statutory power to appropriate land from one purpose to another – for example from housing to planning purposes – which can be a useful tool for unlocking a site, including in some cases overriding restrictive covenants and easements that would otherwise get in the way, ‘converting’ them into compensation claims by the affected third parties. It is a power worth being alive to, but as with everything else, it needs to be exercised properly and for the right reasons.
6. Transparency and TUPE
There is a renewed transparency agenda across the public and private sectors alike, but for local authorities this is nothing new. Local authorities operate under the Freedom of Information Act 2000 and the Environmental Information Regulations 2004 and routinely publish decision reports as part of being accountable to their residents. Although commercially sensitive information can often still be protected, it is important to discuss at an early stage how confidentiality will be managed, establish clear boundaries from the outset, and reflect those expectations in the relevant contractual commitments, rather than assuming confidentiality will be treated in the same way as it would be with a private counterparty.
Staff transfers with local authorities and other public bodies also tend to operate differently from a standard private sector TUPE transfer. While the legal test for whether TUPE applies is the same, public-sector transfers are often accompanied by additional obligations. Fair Deal guidance generally requires transferring staff to retain access to a broadly comparable pension scheme, and, in many cases, admission to the Local Government Pension Scheme, with its associated actuarial assessments, employer contribution considerations and bond requirements.
Workforce protections in the public sector also extend beyond TUPE itself. Public procurements have long included contractual commitments designed to ensure broadly comparable terms and condition for employees recruited by contractors after an outsourcing, as well as for transferring staff. From October 2026, these principles will be reinforced by the new public sector outsourcing provisions introduced under the Employment Rights Act 2025, which place key elements of the former “Two-Tier Code” on a statutory footing and are intended to address gaps in protection left by TUPE. Consultation is also likely to attract greater scrutiny than in a typical private sector transaction, reflecting the interest of recognised trade unions, elected members and the wider public. Factoring these additional requirements into the transaction timetable as a dedicated workstream, rather than assuming they will progress at the same pace as the wider transaction, can help avoid unnecessary delays and unexpected costs.
7. Do not assume your standard precedent will be used
Many public bodies work from their own suite of documents, shaped by internal governance and past matters, and that is intended to reflect a sensible approach to how they are required to operate. Agree early on any given deal ‘who’s precedents’ will be used and who is expected to produce the first drafts of various documents/clauses, so time and cost is spent efficiently and in the right place from the outset. Very often it will be obvious to the parties what’s best but stay vigilant when making these decisions – sometimes seen as an innocuous part of the process, they can have a major bearing on the overall outcomes.
8. Check the title with public sector history in mind
Land held by local authorities and other public bodies can often carry a longer institutional history than a typical private title. This can include statutory trusts, historic charitable restrictions, common land or open space designations, and rights connected to former public functions. It can also carry matters imposed, or agreements entered into, under specific legislation rather than by ordinary deed - for example planning obligations under section 106 of the Town and Country Planning Act 1990, conditions attached to a disposal under a section 123 general consent, or covenants preserved under historic housing or education legislation.
These are technical subjects in their own right, but one of the key potential ‘banana-skins’ here is that such matters will often take effect like conventional restrictive covenants: they run with the land and bind future parties, whether or not those parties are aware of them. It is easy to assume that a historical agreement has ceased to be of relevance simply because it is old or was entered into by a body that no longer exists in that form. That assumption is often wrong and, again, unpicking it late in a transaction can be costly.
Another specific example of this is that land dedicated as a public park or open space under older legislation such as the Public Health Act 1875 or the Open Spaces Act 1906 is often held on a statutory trust for public recreation, even without a formal trust deed. Disposing of or changing the use of that kind of land triggers its own advertising and objection process under section 123(2A) of the Local Government Act 1972, on top of the ordinary best consideration duty, so identifying early whether any part of the site falls into this category has merit.
Local authorities may hold land which may require third-party consent. For example, land involving playing fields or academy land may require the consent of the Secretary of State under the Academies Act 2010 and the School Standards and Framework Act 1998, depending on the nature of the transaction. The need for any third-party consent should be identified and considered promptly, as if discovered later in the process, it could lead to delay with the transaction.
Land can also be listed as an asset of community value, now supplemented by the Community Right to Buy introduced by the English Devolution and Community Empowerment Act 2026, which can trigger a moratorium period and a right of first refusal for community groups before a disposal can proceed. Those undertaking due diligence can check for the existence of these, and other important matters, against statutory registers – this information is revealed in a local search, in the case of ACVs, by including certain optional enquiries within the search template.
Overage and clawback provisions are also a regular feature of local authority disposals, reflecting the authority's ongoing interest in any future increase in value, and need to be checked carefully and factored into any future dealings with the land. All of this can bind successors in title even where it does not appear as a conventional restrictive covenant on the register - reading the register in light of any historic conveyances and/or known statutory history is key.
9. Respect the political and financial calendar
As mentioned above, key decisions often move through officer sign-off, cabinet member approval and sometimes full committee or council, each with its own reporting cycle and public timetable. Public sector budgets and capital programmes run to a financial year end, and the pressure to complete before – or sometimes deliberately after – 31 March can genuinely shape timing. Add to this the fact that, like central Government, local authorities will typically suspend formal cabinet meetings during part of the summer (usually in August) - known as the recess - as well as during Christmas and New Year. Finally, three to four weeks before local or national elections, councils will avoid making new, controversial, or high-profile policy decisions – often referred to as an authority being in ‘purdah’.
This decision chain is part of what makes public sector partners such reliable long-term counterparties: once a decision has been through that process, it is often hard to untie. Building in time from the outset, treating the published statutory timetable as the one that matters, and at the same time being prepared to be flexible – for example, by accepting an authority’s request for a written extension during a holiday period - ought to facilitate successful collaboration and smoother processes overall.
“With the growth and devolution agendas gathering pace, public–private collaboration has never mattered more. A little fluency in how councils actually make decisions goes a remarkably long way.”
Serena Wan
Senior Associate
Remember also that a local authority cannot become insolvent in the conventional sense – the Insolvency Act 1986 simply does not apply to them. The equivalent marker of financial distress is a report issued by the authority's chief finance officer under section 114 of the Local Government Finance Act 1988, signalling that expenditure is likely to exceed available resources, with escalation possible through a best value intervention under section 15 of the Local Government Act 1999, including directions, the appointment of commissioners, or the transfer of functions. Crucially, none of this relieves the authority of its existing contractual commitments or statutory duties, so considering drafting around this framework specifically is often to be encouraged - rather than relying on a conventional counterparty insolvency clause, particularly when financial distress is such a live concern.
10. Tax - VAT and SDLT quirks
Land transactions with local authorities and other public bodies can throw up VAT and SDLT quirks that do not arise in quite the same way with private counterparties. Local authorities operate under a different VAT regime from most commercial landowners, including specific rules on business and non-business activities, which can affect whether VAT is chargeable on a sale or lease and how that needs to be documented. On the SDLT side, overage and clawback payments of the kind discussed above can themselves trigger further SDLT for the buyer when they crystallise and need to be structured and disclosed carefully from the outset. Involve your tax team early on any public sector transaction, rather than treating VAT and SDLT as something to be dealt with at the end.
Bonus. The shifting shape of local Government
Devolution is changing the shape of local Government, and with it, who actually holds the relevant powers. Combined authorities, combined county authorities and their mayors now hold real decision-making and funding powers under the English Devolution and Community Empowerment Act 2026 – building on the general power of competence discussed in point one – working alongside, and in some areas replacing, the traditional district, borough or county council.
The direction of travel, including the new term ‘Manchesterism’, points towards closer public and private collaboration on growth, regeneration and housing delivery, and a growing appetite among institutional and patient capital to back that agenda. Grant funding from central Governmentor bodies such as Homes England still tends to carry conditions attached to the land itself – restrictions on disposal, clawback or overage, and reporting obligations.
Understanding properly, and early on, who the real decision-maker is and what conditions the land carries - what power lies behind which particular throne – will help to transform (seeming) obstacle into opportunity.
Want to find out more? Get in touch – we would be happy to talk you through the practicalities of your next public sector transaction.
This document is part of Devonshires’ ‘It's the law’ series, tailored for people working in development and regeneration. All reasonable precautions have been taken to ensure that the information contained is materially accurate. However, this document is not intended to be legally comprehensive, and no action should be taken on the matters covered without seeking specific legal advice.
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