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GP practices face closure due to eight-year long rent dispute

GP practices face closure due to eight-year long rent dispute

Extensive delays to rent dispute resolution are affecting an estimated 60 practices in Hampshire, resulting in financial strain and ‘imminent’ closure for some.

GP partners and landlords in Hampshire have raised serious concerns with the district valuer’s (DV) ‘abject failure’ to conclude rent review cases.

One practice, St Peter’s surgery, has been unable to sign a new lease due to the dispute, resulting in a notice from the landlord to ‘vacate the building’ by September if a solution is not found. 

GP partner Dr Ali Robins told Pulse her practice has ‘managed to keep the business going’ but they are ‘rapidly running out of money’.

This is due to legal costs, fees to agents to act as negotiators, as well paying for an empty space next door to the surgery which cannot take on new tenants due to the lease stalemate. 

‘We had a pharmacy next door but they moved out when Lloyds went bankrupt. We’ve got tenants ready to go in, but we haven’t been able to renew that sub-lease because we can’t change the purpose because there’s no lease on the building. So we’re paying for the additional space next door as well, which is about £30,000 a year since 2021.’

For rented GP practices, the process for agreeing rental value occurs when the property comes up for review, at which point the ICB usually commissions the local DV to provide an assessment of the ‘current market rate’ of the property.

It is common for a landlord to dispute this figure, but once a rental price is agreed the ICB can then begin reimbursement payments to the GP partners, which is passed on to the landlord.

According to GP partners at St Peter’s and the Old Fire Station Surgery (TOFS), whose premises came up for review in 2016 and 2014 respectively, the DV has recommended a rental price which is below the previously agreed price. 

This has resulted in a decade-long dispute, with the DV refusing to change its assessment and landlords refusing to accept the lower price. 

Simon Harwood, director at ASA Group, which manages the portfolio for St Peter’s landlord as well as many other properties nationally, told Pulse that rent disputes are common, but the level of delays in Hampshire is unique.

‘We’ve never experienced it as bad as it is here, in terms of just an absolute abject failure to conclude cases – and there are loads of cases […] which are backlogging the system.’ 

Mr Harwood said agents in the area estimate there are ‘in excess of 60’ GP practices experiencing lengthy delays to rent reviews.

Wessex LMCs told Pulse it is aware of the issue and is ‘supporting practices that are affected’ by it, but declined to reveal how many practices this includes.

The LMCs did not comment further but said they are ‘always concerned when processes add additional stress and financial consequences for GPs’. 

Last month, St Peter’s surgery issued a statement to patients to warn that there is a ‘real possibility’ the surgery ‘will have to close’ if the issue is not resolved. 

It said: ‘The practice is in the middle of an ongoing dispute between the Hampshire and Isle of Wight Integrated Care Board (H&IOW ICB) and our landlords regarding the rent payments on the surgery premises.  

‘This dispute has been going on since 2016 and despite our best efforts a solution has yet to be found to allow the two parties mentioned to reach a compromise. Unfortunately, this has now reached crisis point and the landlord has given our practice notice to vacate the building if a solution is not found by the 10th of September.’

The partners also encouraged patients to write to the ICB with letters of support for the practice. 

At both St Peter’s and TOFS surgeries, the lower assessment by the DV was based on measurements of the disabled toilets. 

TOFS GP partner Dr Karen Malone said the DV has stated that the rentable space within the practice had reduced as the disabled toilet is ‘smaller’ – ‘how does a disabled toilet suddenly change size?’

Dr Malone also highlighted that the delays from the DV and the ICB to resolve the disputes has meant GP practices and landlords are being ‘timed out’ of the three-year window for taking the issue to NHS Resolution. 

Hampshire and Isle of Wight ICB has informed Dr Malone’s agents that the rent review from 2014 is now closed and there will be no further negotiation – but ‘this will of course be contested’ by the landlords, she said. 

Dr Malone and Dr Robins have called for the rent reviews to be completed, and want assurances that GP partners will not be forced to pay any backdated rent if the eventual agreed rental value is above the ICB’s reimbursements over the last decade. 

‘We do not want to be liable for rent that is due to [the ICB’s] incompetence, essentially, in not holding the district valuer to account […]. It appears that there have been no KPIs put in place to hold the district valuer to account for such delays,’ Dr Malone told Pulse. 

Director of primary care at the ICB James Roach said they support GP practices to ‘pay the appropriate amount of rent for the premises they deliver their primary care services from’.

‘We do this by working within a nationally set process that ensures fair rental reimbursement and value for money for the taxpayer,’ he said.

Mr Roach added: ‘Where there is a dispute, we aim to resolve issues as quickly as possible in a way which is both patient-focused and offers value for money.’

According to the ICB, GP practices negotiate the terms of their premises lease with a landlord, including the amount of rent that will be paid, and alongside this, they apply to their ICB for financial assistance towards the costs.

ICB’s do not negotiate rents directly with landlords, but they do determine the level of reimbursement based on a ‘value for money’ assessment from the district valuer. 

Hampshire and Isle of Wight told Pulse that they follow a nationally established process for setting the level of rental reimbursements, and that if GP practices are unhappy with this, they can continue negotiations with the landlord or take the case to NHS Resolution.

A spokesperson for the Valuation Office Agency said its District Valuer Services (DVS) advises ICBs on the the level of current market rent (CMR), as set out in the NHS Premises Cost Directions, and on ‘whether the rent proposed for leased GP premises represents value for money’.

They said: ‘Our work is carried out in line with Royal Institution of Chartered Surveyors (RICS) guidance, using all relevant evidence available at the valuation date.

‘We aim to progress cases as quickly as possible. If we cannot reach agreement with a GP or their representative, they can appeal to NHS Resolution.’

The DVS told Pulse it is not party to the lease or any dispute between landlords and GP tenants.

This week the Government published updates to the Premises Cost Directions, which now allow commissioners to grant improvement grants for 100% of a project’s value, rather than the previous 66% limit.

In March, a GP practice in South London was served notice to vacate the property within three months following a dispute between the building’s previous owners and the current GP partners.



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So the bird flew away 10 May, 2024 1:55 pm

Whereas wealthy landlords of GP PFI premises get fully paid up without dispute, underwritten by the Great British Taxpayer, and their wealth accumulated in offshore tax havens.