(Time to read: 5 minutes)

Unfortunately, questions relating to property ownership in primary care have risen to the top of many practices’ agendas in recent months, as the impact of the work carried out by NHS Property Services (NHSPS) has become all too clear.

Essentially, NHSPS was set-up in 2013 to sort out a real mess. Somebody had to take on the estate responsibilities of the former Primary Care Trusts that weren’t transferred to providers when the PCTs disappeared. Crucially, however, it was given the remit of acting like a commercial landlord. As a result, numerous GP practices across England who operate from leased premises have been receiving unexpected and often quite substantial invoices from NHSPS for both building rental and management, as well as provision of services such as cleaning.

The situation reached tipping point last year when the BMA’s GP Committee announced it could consider legal action on the matter, which has left some of the 14% of GP practices under NHSPS facing an increase in service charges of more than £60,000 a year.

The BMA says that these increases are being levied with seemingly no reference to the contractual arrangements (or lack thereof) that are in place, or the sums historically paid. This issue is further complicated as practices are often not provided with an itemised list of charges, or when they are, there are often errors or incorrect charges included.

It’s worth pointing out here that the issue isn’t exclusive to NHSPS either – practices that lease from Community Health Partnerships (CHP) have also been affected.

What can you do?

1. Signing a contract:

Thankfully, it’s estimated that a good number of practices on the receiving end of the hiked charges haven’t yet agreed their contract.

If that’s the case, the BMA advises that in respect of lease negotiations, although it supports the view that practices should engage in the process, it is vital that they do not sign any lease or Heads of Terms (including those purporting to be based on the national template GP lease negotiated between the BMA and NHS PS) unless and until they fully understand and are comfortable with your potential liabilities. To this regard, appropriate due diligence as to potential liabilities should be carried out.

2. Service charges:

Particular care should be taken on the issue of service charges so as to avoid a situation where there is an exposure to uncapped and unreasonable costs that bear no resemblance to what arrangements previously existed.

Ultimately, the GPC is pushing to reach a negotiated agreement nationally, but it is prepared to consider all and any other possibilities to realise a situation whereby a fair and reasonable process for calculating service charges is agreed, which has due regard to historic arrangements and does not result in practices having to fund the historic neglect of buildings.

This guide to service charges on the BMA website is well worth a read.

3. Lease template:

A template lease which is very favourable for the tenants has been negotiated and it includes:

• a break clause allowing a practice to break their lease if they lose their core contract, and favourable assignment clauses enabling a practice to assign the lease to different partners or NHS allowed entities – these will ease the ‘last man standing’ phenomenon
• maximum lease term of 30 years, with in-built renewal clause
• mechanisms built into the lease to ensure that reviewed/revised rents match what will be reimbursed via the premises cost directions
• a requirement for service charges to be agreed before the lease is signed

The lease is intended to be a framework for practices to negotiate with NHSPS, and details of the lease will be negotiated on an individual basis. Before entering into a lease, it’s strongly recommended that practices undertake due diligence and seek legal advice. More information about  the template lease can be found here.

Some good news

There is one small crumb of good news for affected practices. Various incentives are available to practices to help them get this issue sorted out. Qualifying practices can benefit from the following:

• Reimbursement of Stamp Duty Land Tax for the initial term (up to 15 years) – generally on new long-term leases
• Contributing up to £1,000 plus VAT of legal fees related to the lease transaction – this is for legal fees and has nothing to do with District Valuers etc.
• Reimbursement of management fees for the financial year 2016/2017 and 2017/2018.

The money was made available via the General Practice Forward View, which committed to providing financial support to every GP practice that is a tenant in an NHSPS or CHP building to enter into a new lease.

However, be aware that applications must be made by 31 March 2018 – a date that has already been extended from the original deadline of November 2017.

The process for claiming this support is as follows:

• The GP practice should formalise their lease with Community Health Partnerships/NHS Property Services Ltd.
• The GP practice will incur costs and should apply for reimbursements by submitting the Lease Incentives Claim Form to [email protected] by 31 March 2018
• The claim form is sent to the GP practice’s commissioner for review and subject to approval, the NHS England Central Finance Team will be instructed to release the revenue to the local commissioner so they can reimburse the GP practice.

The GP lease saga is a sorry one and has cost practices dear, even forcing some practices to close and prompting others to purchase their premises. To lease or not to lease – that’s a question we’ve answered before.

Have you been impacted by a massive lease increase or a hike in service charges? What did/are you doing about it? Please let us know, either by commenting below or by joining the conversation on the Practice Index Forum here.

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