In April 2019 it came to light that for 70 percent of tenants occupying properties, NHS Property Services (NHSPS) have no signed rental agreements in place. The Department of Health and Social Care is committed to initiatives to improve property utilisation and value for money. In an open letter NHS England and NHS improvement are encouraging GPs and providers of all types to formalise their tenancy agreements.
Benefits include an improved understanding of the true cost of occupation, better informed decisions about the best location for services and clear incentives to encourage more efficient use of space.
Three options are available which are: a full lease, a rental agreement letter (an interim measure) or open space, a digital platform to find and book sessional space rooms.
NHS England and NHS Improvement are keen to resolve outstanding cases and reach agreement with GP practices and providers and are expected to enter open discussions with NHSPS with a view that by April 2020 all tenants occupy under one of the forms of agreement. This sounds like a massive undertaking.
Leases – advantages
A lease provides clarity and ensures that tenants have what they need to provide services and what space is theirs exclusively, how long the right to occupation lasts and how it can be terminated. It also explains the liabilities and what services NHSPS provide to the building.
Tenants can be sure that they can deliver their services from their practice premises and such security is difficult with an informal arrangement.
Clarity of occupation allows the landlord to provide: accurate allocation of costs, clearer billing, detail on how costs are calculated, certainty and forecasting on future costs.
Under premises costs directions GPs must prove the tenancy of the premise represents good value for money. A formal documented lease agreement is evidence of this and can support claims for rent reimbursement.
Investment and Improvement
Any application for a premises improvement grant under the premises cost direction must include evidence that the practice benefits from adequate security of tenure and a formal documented lease for a fixed term is the best evidence for this security. Grants from the Estates and Technology Transformation Fund and Strategy and Transformational Partnership Capital Programme are subject to the same requirement. Landlords will be unlikely to commit any of their own capital to improving a building where the tenant does not have a formal lease.