2/4/19 – AR reports on NHS Surgery Premises Cost Directions

The changes in the National Health Services (General Medical Services Premises Costs) (England) Directions 2013 may have frustrated and confused many, especially when comparing it to its predecessor, the 2004 Directions. After more than a decade of using the Directions, there has been a recent NHS Resolutions case which could change this.

The NHS Resolutions dealt with a case in June 2018 involving the interpretation of the Directions. The questions involved not only determining the value or CMR of the premises, but also to determine the approach and to ascertain the appropriate NHS Directions to adopt. In this particular case the premises were let under a lease dated 24th April 2008 with a rent review on 1st April 2016. Initially it was assumed that the 2013 Directions would be used to review the rent, however after re-evaluating the 2013 Directions (paragraph 56), this was deemed not correct. The NHS Resolution report states ‘paragraph 56 (1) states ‘where immediately before 1st April 2013, a Primary Care Trust (now NHS England) was making payment to a contractor under Part…5 (recurring premises costs)… of the 2004 Directions, the Board must continue to make those payments as if the 2004 Directions, as in force immediately before 1st April 2013, continued to apply, and those Directions are to be treated as directions to the Board’’.

Although this is not a high court decision, it does clearly open ‘pandoras-box’. There are a number of surgeries, especially in London and similar high value areas, which could benefit from being reviewed under the old Directions, especially when considering paragraph 33 and Schedule 2 of the 2004 Cost Directions, which states that the premises can be valued for practice purposes and for any other purpose for which planning permission has been granted, or might reasonably expect. The 2013 Directions only allow surgery use. This could alter the rent review valuations on premises which were historically valued under the 2004 Cost Directions adopting alternative residential or commercial values but where the CMR has been reduced under the 2013 Directions using surgery value only.

If you would like to discuss your CMR or rent reviews, please feel free to contact Aitchison Raffety, where one of our specialist Healthcare Surveyors will be able to evaluate your situation and provide advice.

Davies, Georgina cropFor further information, please contact Georgina Davies via email to georgina.davies@argroup.co.uk or call 01727 844 555