The National Health Service (General Medical Services – Premises Costs) Directions 2024: what do GPs need to be aware of?

read time: 4 mins

On 10 May 2024 the National Health Service (General Medical Services – Premises Costs) Directions 2024 came into force introducing significant changes to the procedures governing the funding of GP premises by the NHS. 

Particular emphasis has been placed on rent reviews, lease renewals, notional rent appeals and NHS funding for premises improvement. In this guide, we set out some of the key changes that GPs need to be aware of. 

Rent assessments

New measures have been introduced changing the way rent assessments are carried out for the purpose of calculating the notional rent:

  • Neither the NHS nor the integrated care board may negotiate directly with landlords while the GPs are negotiating the new rent with the Landlord under the rent review process.
    Landlords must be given the opportunity to say what they think the current market rent should be for the premises. Such suggestions must be forwarded to the district valuer.
  • If all GP partners have retired the NHS may, but is not obliged to, stop paying the notional rent and start reimbursing the current market rent instead.
  • There is no longer a requirement to enter into a rent review memorandum once the new rent is agreed. Instead, GPs must give the district valuer the proposed new rent figure along with evidence of the negotiation which has taken place and a formal valuation if relevant. 
  • NHS Property Services Limited and Community Health Partnerships Limited are allowed to include upward only rent reviews in their leases.

GPs have 12 weeks from the date they receive confirmation of the notional rent figure to notify NHS England whether or not they accept the assessment of the rent. If they don’t do this the NHS may not provide funding.

The National Health Service (General Medical Services – Premises Costs) Directions 2024 introduces the ability for chartered surveyors to act for the NHS to assess the notional rent. Previously only the district valuer could do this. Hopefully this will speed up the process of obtaining funding application approval.

Lease terms

If GPs agree a lease premium with a landlord which reduces the amount of rent they pay under the lease, the NHS may reimburse the premium.

GPs must use ‘reasonable endeavours’ to make sure that the landlord will not charge VAT during the term of the lease. This is particularly important in sale and leaseback scenarios where GPs are selling the freehold and leasing it back to themselves. 

If ‘reasonable endeavours’ are not used and any VAT is subsequently charged, the VAT may not be recoverable from the NHS. It is unclear how this will play out in practice and how GPs will be able to show that reasonable endeavours were used if there is a dispute.

Premises and premises improvements

Funding is available for works carried out to improve the GP surgery. The amount which can be claimed can be up to 100% of the value of the project, in contrast with a cap of up to 66% previously. ‘Improvements’ now include building an extension or doing an internal refurbishment. If the GPs contract with the NHS is terminated then any funding must be returned. 

The funding does not cover:

  • General repairs and/or maintenance carried out to the GP premises
  • Any costs incurred if they will be subject to a tax relief claim. If, for example, capital allowances relief is going to be claimed in respect of certain works then the cost of these works will be covered by the funding.

Changes to the time periods within which GPs funding is reduced because they have received a capital contribution for building and/or refurbishment works. The time periods have been broken down into new thresholds depending on the value of the works carried out.

There is a new requirement for the district valuer and GPs to consider whether there is scope to extend the use of the premises for other ‘multi-functional uses’ in addition to its current use.

GPs may now recover their legal and other professional fees incurred in preparing the documentation necessary to share the premises with a third party, i.e. a pharmacy.

Retiring GPs

If the last remaining partner in a practice wishes to retire and the lease of the premises has not yet expired, the NHS must establish a protocol for deciding whether or not to assign the lease to a ‘nominee’.

Minimum standards 

The NHS may inspect any premises to make sure new minimum standards are being met. The minimum standards require GPs to comply with health and safety legislation, fire risk precautions, Equality Act obligations and any other rules governing gas electric and asbestos at the property. This is in addition to complying with general safety standards.

Recovery of overpayments 

Any overpayments made to GPs in error must be reimbursed to the NHS. In such a scenario GPs need to make sure the amount of any overpayment is accurate and come up with a repayment plan if necessary. 

Next steps

We recommend you seek specialist advice if you are looking to make improvements to your GP premises or enter into a new lease. 

For more information on the changes please contact Ben Tarrant.

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