New Premises Costs Directions: what does it mean for GP tenants

In our second blog in our series on the new NHS Premises Costs Directions (PCDs), we look at what the PCDs mean for GP tenants.

GP tenants will be aware that the new PCDs include changes to how actual rent reimbursement is applied. It is still the case that the reimbursement is linked to current market rental however NHS England can now choose to have this settled by the District Valuer (DV) or by an ‘appointed valuer’ opening this role up to the wider market. It is hoped no doubt that this will speed up rent approvals which currently can take as long as two years in some cases waiting for the overloaded DV to look at an application. Whether the Integrated Care Boards choose to go down this route is another question.

However, once a GP contractor does finally get a decision from the DV they must accept or appeal within 12 weeks. Failure to do so could leave them unable to claim the reimbursement. Whilst it is arguable that this does not apply to decisions relating to past rent reviews (prior to 10 May 2024) it would be good practice to respond promptly to avoid any dispute on this point.

The new PCDs also provide clarity on other issues. For example, it is clear that any element of payment for works already paid for under the Directions or from other public funds will be taken into account in respect of determining the current market rental. This should help provide clarity on the use of section 106 monies for premises development.

The new Directions also provide clarity around the potential for clawback. For example, where rent is overpaid or a service charge is reimbursed on the basis of an estimate there is a procedure for clawback of any overpayment once the balance has been determined.

There is also a stronger focus on the contractor meeting the usual requirements of a tenant. It was previously the case that NHS England could withdraw reimbursement if minimum standards were not met in terms of repair but now, they have additional powers in respect of surveying and identifying those minimum standards. It is also clear that improvement grants will not be awarded where the ‘improvement’ is actually simply bringing the property to the required standard.

There are also much needed additional provisions regarding use of space in leased premises by third parties – we will be looking at this in our next blog.

We would advise any contractors about to enter into new leases review the terms in light of the changes to the PCD to ensure that they are compliant.

You can read our first blog on what the PCDs mean for the development and improvement of GP premises here.