New NHS Premises Costs Directions

From 10 May 2024, all payments to GMS GP contractors for premises costs will be determined by the new 2024 Premises Costs Directions, which replace the 2013 Costs Directions.

The new directions can be found here.

Whilst it will take some time to digest all the details, the key changes include:

Notional Rent Assessments and leasehold rent reviews

The new Directions suggest that property valuations may be undertaken by an ‘appointed valuer’ instead of the district valuer. This is further defined as a RICS registered professional appointed by NHS England to perform property valuations. This may help to reduce the current delays if it’s utilised.

Practices will have 12 weeks to confirm whether or not it accepts the market rent determined by the valuer.

Leasehold rent reviews

Practices will no longer be required to submit a signed rent review memorandum prior to the assessment for reimbursement. Instead, the contractor should negotiate the rent with the landlord and provide evidence of this to NHS England.

Premises owned by NHS Property Services Limited and Community Health Partnerships Limited will be subject to upwards only rent reviews.

For sale and leaseback arrangements, NHS England will have discretion whether or not to reimburse VAT. Practices are being asked to use reasonable efforts to agree with the landlord that no VAT will be charged during the term of the lease.

Clawbacks

The directions allow NHS England to claw back overpayments and there doesn’t appear to be a time limit on this. Practices must also notify NHS England of any overpayments that they receive.

Last partner standing

The directions introduce new flexibility for NHS England or its nominee to take over leases where one remaining partner wishes to retire and is unable to find a successor.

Premises improvements

Practices can now apply for up to 100% funding for premises improvements. This had previously been restricted to 66%. It should be noted that no additional funding is being made available for this and without further capital investment, this seems unlikely to deliver an overall improvement to GP premises. 

For the first time, the funding can be used to cover the purchase of land and stamp duty land tax. It will also be possible to apply for grants for improvements which reduce the environmental impact of the premises.

For practices that have leased new premises, the grants can be used to cover the fitting out of the premises and payments can be made directly to the landlord.

Improvements made as a result of regulatory changes are also now provided for within the directions. We would like to hope that funding should now be accessible in more situations, which should help practices.

Abatement of notional rent

Where capital has been contributed for the cost of a building or refurbishment work, notional rent is abated. The time periods for rent abatements have been changed and range from 6 years for less than £144,000 of funding, to 18 years for more than £1.2 million.

If you’d like to discuss this or a medical accounting issue further, please get in touch. Call 0330 024 0888, email enquiry@larking-gowen.co.uk or submit an enquiry here.

Abigail Mattock