New NHS Premises Cost Directions 2024
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Key Changes and Updates:
1. District Valuer Alternative: Whilst the Directions make reference to the District Valuer, this can now be an alternative appointed valuer so this does give scope for NHS England or ICBs to appoint a valuer of their choosing.
2. Improvement Works Enhancement: Improvement works have been substantially amended with it now being possible to secure an improvement grant of up to 100% of the cost. The period of the abatement has been revised with the maximum abatement period now being 18 years.
3. Recovery Provisions: The Directions now make scope that where there is an improvement grant that NHS England can seek recovery of this if the property is no longer used as a surgery for the minimum guaranteed period of use.
4. Land and Premises Purchase: Improvement grants can now be used to fund the purchase of land and/or premises to provide primary care services.
5. Car Parking Modifications: Car parking arrangements have been slightly modified. The new Directions now allow NHS England to consider the funding of such car parking spaces where previous restrictions are inappropriate.
6. Environmental Impact Works: Works to reduce environmental impact can now be subject to funding if the contractor can satisfy NHS England that those improvements provide a net financial benefit to the Health Service.
7. Stamp Duty Reimbursement: Where practices are purchasing land, it is now possible for the GP practice to request reimbursement of stamp duty land tax (SDLT) on acquiring land or premises.
8. PFI and LIFT References: There is now reference to PFI and LIFT, which is perhaps slightly unusual given the historical context.
9. Top-up Rents Expansion: Under the previous Directions, top-up rents were meant to be limited to areas of deprivation. The reference to deprivation has now been removed, resulting in top-up rents likely to be the way that new premises are to be funded.
10. Rent Review Process: A major change is that when NHS England (or ICB) notify the practice of the proposed Current Market Rent/Notional Rent (CMR6 or CMR4 letters) that this must be responded to within 12 weeks.
11. VAT Considerations: When taking a new lease, practices are to seek an undertaking from the landlord not to waive the exemption to VAT.
Conclusion
Overall, the new Directions have tidied up some anomalies that were from the previous Directions and have improved matters when it comes to improvement grants both in terms of the quantum of the improvement grant but also what the improvement grant may be used for.
The rent review process is now given greater clarity, or at least for notional rent (when practices own their surgery) notably the 12 week deadline to respond to the CMR4 or CMR6 letter as issued by the ICB.
I was surprised there were certain omissions, notably that there is no reference to Energy Performance Certificates (EPCs) but this may be consistent, if outdated, in that works to improve the environmental performance of the property are still to be excluded from funding.
Whilst the Directions may be clear on the rent review process and the process for approving new leases for premises, no specific mention is made of the lease renewal process.
Adam Thompson