For those in the primary care sector who have an entitlement to NHS rent reimbursement, under the Premises Costs Directions 2013, it is important to understand the necessary steps for gaining NHS England’s approval of a lease as well as the legal steps that should be taken before entering into a lease of practice premises. Failure to comply with the requirements of the Premises Costs Directions may mean your application for rent reimbursement fails.
NHS England’s Process:
Under the Premises Costs Directions, NHS England must receive a copy of the final draft lease before it is signed. The proposed lease must include full details for the landlord and the tenant, a lease plan, the proposed commencement date, the initial rental value and confirmation of the VAT status of the parties. NHS England will liaise with the NHS contractor only and will not negotiate with the landlord or either party’s solicitors. NHS England will not accept rent reviews on a retail price index (RPI) basis, as they are generally considered not to be value for money. Instead, rent reviews should be a market rent review on an upwards and downwards basis for a hypothetical 15 year term and a “time is of the essence” clause is required. This is a clause which makes the timing of a rent review of material importance and means that if the rent review is not conducted within the required timescale then the right to conduct it may be lost
The proposed lease will be submitted to the District Valuer for a current market rent assessment and Value for Money report. The process to gain approval usually takes many months – generally in excess of 6 months in our experience. Following receipt of the Value for Money report, NHS England will agree to pay rent reimbursement of either the current market rent value or the actual lease rent, if this is a lower amount.
Once approval is received, the lease can be signed and dated by the landlord and the tenant. A copy of the dated lease should be sent to NHS England following which they will check it against the draft lease. A full reconciliation will be completed on the account and back dated to the commencement date of the lease should there be no variations between the draft and final lease.
Summary:
Given the approval process that is required, and the likely timescales, we recommend commencing lease negotiations as early as possible so that the proposed lease may be provided to NHS England as early as possible in order to prevent delays to completion of the lease.
For further information, please contact:
Rebecca Wakefield, Hill Dickinson
rebecca.wakefield@hilldickinson.com
