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GP surgeries at risk of closure under ‘premises costs’ clause

Many GP surgeries across the UK could be at risk of closure as they could lose a large proportion of their notional rent due to the re-write of the Premises Costs Directions, which came into effect in April 2013, GP Surveyors has warned. 

The Premises Costs Directions govern reimbursement of GP surgeries in England according to ‘notional rent’ calculations.   

Andrew O’Dowd, director at GP Surveyors, a firm of chartered surveyors for doctors' surgeries, said: “There are quite a few GP surgeries in the UK that have previously been valued on an ‘alternative use’ basis. However, the Premises Costs Directions 2013 prevent a surgery from being valued as anything other than a GP surgery, meaning that their notional rent could be as much as halved!” 

He added that so far ‘alternative use’ valuations have been most commonly used in the London area and are generally used when GP surgeries are located in high-value office districts, residential areas or retail parades. In situations like this, the GP premises would be correctly valued by looking at comparable office, residential or retail rents rather than comparable GP surgery rents. 

But O’Dowd remains pessimistic: “At GP Surveyors, we have a number of GP clients whose triennial notional rent reviews are looming and we are extremely concerned that their reimbursement will be reduced so dramatically that it will be impracticable for their surgeries to remain open. 

“Not only this, in all instances, it would make more commercial sense for these GPs to sell their premises and cash in on the higher values that these competing bids (alternative uses) would attract.” 

There have already been a few cases where notional rents have gone down “significantly” due to the ‘alternative use’ issue – but O’Dowd said he was unable to provide specific details as they are currently tied up in the appeals process. 

Additionally, it has been warned that the Premises Costs Directions 2013 are also causing issues for GP surgeries with tandem car parking spaces (spaces where staff can double-park) and air conditioning. 

O’Dowd said: “NHS England used to properly reflect tandem car parking spaces and quality-enhancing air conditioning when calculating notional rent reimbursement. However, these elements are now categorically excluded, causing reductions in reimbursement. These are features that have come about due to increasing demand so it stands to reason that they add value to the premises.” 

The Premises Costs Directions 2013, which replaced the 2004 Directions, were billed as interim. However, GP Surveyors said it is not aware of a revised version being close to release. 

“GP Surveyors would encourage NHS England to pay careful consideration to the clauses preventing ‘alternative use’ valuations and the clauses which remove tandem spaces and air conditioning from Notional Rent valuations,” said O’Dowd. “These clauses are putting GP surgeries at risk of closure at a time when more and more services are being demanded from primary care.” 

NHE has sought comment from NHS England, but at the time of publication had received no reply. 

(Image copyright: John Blower and NHS Lambeth)

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