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Many GP practices around the country occupying buildings owned by NHS Property Services Ltd (NHSPS) have received updated NHSPS Charging Schedules, dramatically increasing their property costs.
By way of example, we have recently helped a Practice Manager who needed advice after receiving an NHSPS Charging Schedule for the last 12 months, which increases their former ‘estates charges’ for their building by over 200% and their rent by over £100,000, without DV assessment and without the approval of the practice.
NHS England (NHSE) are paying some of these charges directly, without the approval of the practice, and repeated requests for clear information on how the new costs have been calculated have so far been unsuccessful.
The practice has also received ‘Heads of Terms’ for a new lease, which indicate amongst other things that the practice will be responsible for all repair costs at the building going forward. NHSE is offering transitional financial support for the next 18 months to help with the new charges and some financial support for legal and stamp duty land tax costs if they sign up to new lease before the end of November 2017, but NHSE is unable to confirm the amounts available or where the funds will actually be coming from – and whether their support will continue for the full term of the new Lease.
New Lease Terms and NHSPS Charging Schedules
For many practices around the country in NHSPS owned buildings, this is a familiar story. If you are one of these practices, you should have recently received ‘Heads of Terms’ for a new lease from Montagu Evans (surveyors acting for NHSPS), who were tasked with issuing new heads of terms to all undocumented occupiers by the end of March 2017. Most practices have also received demands for hugely increased service charges, which in some cases have brought into question the future viability of those practices.
Where service charges have been increased, it is important to verify the calculation of these charges and indeed the contractual basis on which NHSPS thinks it can recover these costs. Where there is no existing Lease in place, it may be possible to challenge the basis on which the payments are being calculated and requested, even where some or all of those costs may be reimbursed initially.
It is not a given that the reimbursement offered will continue and to accept the increased charges without challenge may set a precedent going forward which is difficult to row back from.
The Heads of Terms is an important document as it sets out the proposed key terms for your new lease. We recommend that these key terms should be properly negotiated and agreed with NHSPS, so the partners can make an informed decision about whether to proceed with a new lease on the terms offered. It is important to understand the reality of the financial and legal commitment created by a Lease before agreeing to it and to have clear confirmation of what level of rent and other costs will benefit from reimbursement from NHSE or the CCG.
Whilst the BMA have approved a standard form of base Lease, this should be reviewed and negotiated to ensure it is appropriate for each Building and reflects the Heads of Terms agreed with each practice.
How VWV Help You
It is very important to get the right advice at the right time. We are representing over 30 practices currently involved in lease and Charging Schedule negotiations with NHSPS. We work closely with a number of specialist healthcare surveyors who are best placed to help you interpret and test the Heads of Terms and Charging Schedules for accuracy and negotiate them with Montagu Evans.
Our Healthcare team has the expertise to help you understand your current legal position, which is an important part of these negotiations and the detail of what is being offered. We can help you identify and agree the key issues and the available options, to enable the partners to make an informed decision and negotiate the best possible property terms for the future of your practice.
For more information, please contact Ben Willis, Rebecca Beardsley, Ros Parkin or Varsha Pattni in our Healthcare team on 0117 314 5394.