Cost Rent and Notional Rent explained

All Doctors who own their own surgery are entitled to rent from the PCT as a reimbursement for allowing their property to be used for NHS purposes. This can either come in the form of Cost Rent or Notional Rent. Under the Premises Cost Directions 2004 all PCTs have obligations which they must fulfil and this document will explain exactly what GPs are entitled to.

Cost Rent

Cost Rent is no longer used for new surgeries however some practices still remain on this scheme as this is how they have historically been reimbursed.

Its purpose was to reimburse the cost of finance from providing new or considerably modified buildings. GP Surveyors recommend that all practices which are on Cost Rent request a Notional Rent figure from their PCT as after being on Cost Rent for a few years it may be financially beneficial to move over to ensure that equity is being maximised.

Once this figure has been requested it is always worth getting it checked by a specialist who will be able to advise as to whether this is the maximum level of reimbursement that could be received. If a Notional Rent figure has been requested the surgery is not obliged to move from Cost Rent if it is not going to be financially beneficial, however once the transition has taken place the surgery cannot elect to move back onto Cost Rent.

Notional Rent

If a surgery is on Notional Rent the PCT will establish the current market rent (CMR) of the property or the actual rent if it is a leased building, whichever is less. Under the Premise Cost Directions 2004 practices are entitled to a rent review every three years. Some PCTs have recently informed their Doctors that they are not undertaking rent reviews, but this is not allowed and is grounds for referring the case through the NHSLA for appeal. It is therefore imperative that Doctors and Practice Managers are proactive when it comes round to their Notional Rent.

If the PCT is not forthcoming with the rent review they should be contacted and a PREM 1 form requested. A District Valuer should then be instructed to undertake an inspection of the property. They should then provide a figure to the PCT. Practices should also be mindful that they may need to chase the figure up from the District Valuer. GP Surveyors can assist free of charge at every step during this stage including help with contacting the PCT or the District Valuer to request a rental figure.

Once the figure has been received by the PCT it should always be checked by a specialist. District Valuers valuations can be conservative and not reflect all of the appropriate evidence.

Notional Rent - What next?

So, you’ve received your figure from the PCT but what do you do next? GP Surveyors recommend that you always consult a specialist surveyor who will be able advise as to whether you are receiving the correct level of reimbursement.

Every Doctor has the right under their contract to check that they are receiving a fair rental and if a challenge is to be made it is expected that evidence will be provided which is where Chartered Surveyors are required.
If we feel there is a case we will work on a ‘No Increase No Fee’ basis meaning that if we are unable to achieve an increase above the District Valuer’s offer you will pay nothing; you really do have nothing to lose and everything to gain!

GP Surveyors will use a blend of expert knowledge and skilled negotiation to look at all of the comparable evidence to ensure that you are receiving the maximum level of reimbursement you are entitled to. If an agreement cannot be reached at a local level with the District Valuer we will progress the case through the appeals process to ensure that a satisfactory result is achieved.

NHSLA Appeals

If an agreement cannot be reached locally between the District Valuer and the instructed Surveyor, or the PCT refuses to offer the triennial rent review, the case can be progressed through to an NHSLA appeal.
A new protocol has recently been issued as a direct result of the work GP Surveyors has done for GPs which sets out a procedure to be followed by both parties to encourage agreements to be agreed locally. GP Surveyors offer this service as part of the ‘No Increase No Fee’ package.

The NHSLA will now assess if all "reasonable effort" has been made to resolve disputes locally by all parties before accepting and processing a referral under the National Dispute Resolution Procedure. The new process will help to prevent many cases going as far as the NHSLA and enable them to be dealt with in a more timely and cost-effective manner.

When to contact GP Surveyors?

Notional Rent

• You have never received a rent review from the PCT
• Your 3 year review has passed but you haven’t received a new figure yet
• You have received your new figure from the PCT but want to ensure you are receiving the maximum entitlement
• You have received a review figure and have done nothing with it
• Your PCT have informed you that they are not undertaking rent reviews

Cost Rent

• You are on Cost Rent but would like to explore the possibility of moving to Notional Rent

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