GP premises costs directive update

The BMA has reported that the 2018/19 GMS (and PMS) contract negotiations secured key changes to the much anticipated new Premises Costs Directions (PCD). Specialist law firm VWV‘s Rebecca Beardsley explores the proposed changes and what you need to know

The new Premises Costs Directions (PCD) have not yet been published and it seems likely that they will not be finalised until the 2018 ‘Premises Review’ has been carried out.

The BMA state that a specific ‘Focus on Changes to the Premises Costs Directions’ will be published, following which there will be a further update.

We at VWV will be writing to NHSE and the BMA to request that we are afforded the opportunity to take part in the ‘2018 Premises Costs Review’ to ensure that we can feedback our experience of advising GPs on premises issues. 

The proposed changes are:

• All new terms will be prospective (i.e. they cannot be retrospectively applied).
• Rent reviews will not lead to varying lease terms.
• Rent reviews will not require contractors to undertake their own valuation, just evidence of a negotiation with the landlord; if the negotiation is unsuccessful the DV will assess.
• Contractors must attempt to ensure VAT for rent is not passed on to them, but where it is the board will reimburse.
• More formalised arrangements for third-party use of premises, with no financial disadvantage to the contractor.
• Improved provisions for minimum standards reviews.
• Contractual rights to reclaim overpayments (from the time the PCDs are published).
• If in receipt of a grant and the board and contractor agree to relocate, the board will waive the grant agreement and any restrictions and requirements thereof.
• PCD funding will be for anyone providing general medical services (as determined by the board), currently, anyone holding a GMS contract.
• Improvement grants will now be permitted to purchase land to build an extension to existing premises.
• Grants representing 100% of the project cost will be allowed (currently only 66% of the project cost is permitted).

Amended abatement/use periods have been agreed, outlined below:

Current abatement /use period (up to 66% borrowed)	New abatement / use period (up to 100% borrowed)
Up to £100k: 5 years	Up to £120k: 6 years
£100k – £250k: 10 years	£120k – £300k: 9 years
Over £250k: 15 years	£300k – £550k: 12 years
	£550k – £1m: 15 years
	Over £1m: 18 years

Last Partner Standing (Owner-Occupier)

• Explicit options if an owner-occupier is in receipt of a grant and hands back core contract during the abatement period:
  • remove premises from NHS use, sell and repay the rest of the grant;
  • remove premises from NHS use, retain and repay the rest of the grant;
  • offer continued use of premises for another practice to lease (in this situation the new practice would have lease amended to repay the rest of the grant).

Last Partner Standing (Leaseholder)

• Explicit options if a leaseholder is in receipt of a grant and hands back core contract during the abatement period:
  • assign the lease (and any grant agreement) to another practice;
  • relinquish the lease if landlord agrees (possibility of assistance with any related repayments);
  • potential for the Board to assign the lease to their nominee;
  • if in receipt of a grant, possibility for the Board to waive grant repayment.

What is the Premises Review?

The BMA confirmed that there will be a wide review of premises, which will commence in early Summer 2018. The review will be led by Department of Health and NHS England, working closely with GPC England and other key stakeholders.

The aims of the review are to:

• provide a better picture of the overall position on primary care estates;
• address some outstanding issues from the PCD review, including:
  • Development grants
  • Last partner standing situations;
• ensure that premises are fit for purpose into the future;
• take into account likely services and other developments;
• promote recruitment and retention of GP contractors;
• ensure GP premises represent value for money;
• help inform a better integration of services into the future.

Please note that the above summary information is from the BMA website.

Rebecca Beardsley of the VWV Commercial Property team can provide additional information on this area.

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