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GP practices threatened with bankruptcy due to unpaid rent

Exclusive A number of practices are at risk of going bankrupt after being told by NHS officials to pay rent where lease agreements are yet to be agreed.

GP lawyer Edwina Farrell told Pulse that several of her clients occupying NHS-owned properties have been threatened with legal action by NHS Property Services (NHSPS) if they fail to pay rent owed over a number of years. 

In some cases, GPs were only given a two-week notice to pay backdated sums in excess of £100,000.

NHSPS reassured GPs that statutory demands have not yet led to bankruptcy proceedings.

Pulse has long documented disputes over premises service charges since reporting in 2016 that several practices saw their fees hiked by up to 400%, while more recently a practice had its service charge triple to over £100,000 in four years.

Ms Farrell, partner at national law firm Weightmans LLP, with experience advising GPs on premises issues, said she is working on cases where practices were sent letters before action. 

These notices could lead to statutory demands being served, which could ultimately result in bankruptcy proceedings, she said. 

She told Pulse: ‘Several GPs I’ve been advising have received letters before action where no sums of rent whatsoever have been paid. And we’re talking about significant sums.

‘In many cases GPs haven’t received money from the CCG. But NHSPS [are saying] if they do not give them this money they’re entitled to take action, which could well lead to the GPs being made bankrupt.

‘All of the examples I have seen have been significant, with figures in excess of £100,000.

‘Rent figures haven’t necessarily risen it’s just that there’s been a significant period over which some haven’t been paid.’

At the moment, most practices located in NHS premises receive reimbursements for their rental costs after having paid NHSPS. Ms Farrell said some GPs faced with substantial bills do not always have the available funds to cover the rent asked by NHSPS.  

Ms Farrell said that GPs were sent ‘threatening letters’ giving them ‘about two weeks on average’ to pay.

She said: ‘The GPs don’t have this money sitting in their account – they have to complete the paperwork, submit it to the CCG and the CCG has to process it. CCGs are pretty good but two weeks isn’t a long time when practices also have to look after their patients.’

In April last year, NHS England told NHSPS’ tenants that they would have until April 2020 to ‘occupy under one of the forms of agreement’, including full lease, rental agreement letters and open space.

At the time, NHS England warned that failure to engage could result in ‘legal recourse’.

However, Ms Farrell argued that the timeframe is tight as many GPs will be reluctant to sign an agreement where service charges have been ‘inconsistent’.

She said: ‘The issue which regards to not entering into leases is what takes us into the service charges well. GPs don’t agree the service charges and for as long as these problems remain outstanding, and no line is drawn in the sand with regards to the service charge, then GPs are going to be reluctant to sign up for something.’

‘There are still too many discrepancies on service charge bills. In many cases the historic service charges are unsubstantiated.’

An NHSPS spokesperson said: ‘NHSPS is committed to working with its customers to resolve any issues related to their charges in a timely manner. A letter before action is only issued following multiple attempts to engage with a customer regarding non-payment of reimbursable charges and a customer has refused to engage with us and not paid, without raising valid disputes on our invoices.’

They added: ‘This is part of a standard approach to seek constructive dialogue with tenants on outstanding charges and reach a resolution. The letter before action provides a two week notice to dispute/pay the charges before further enforcement action is considered such as a statutory demand, and statutory demands are only served on debt free of valid disputes.’

Pulse previously revealed that a GP practice had been asked by NHSPS to pay half a million in service charges for ‘non-existent’ services.

A recent Public Accounts Committee report found that NHSPS was ‘set up to fail’ due to a lack of powers and inherited long-standing issues.

Please note, this has been amended to clarify that the words ‘if you do not give us this money we’re entitled to we will take action, which could well lead to you being made bankrupt’ were Ms Farrell’s own interpretation of NHS Property Service’s actions, and not the words of NHSPS themselves. Apologies for any confusion caused.