The NHS are increasingly trying to clawback monies from GP practices who gain additional income – including income generated by offering non-GMS/PMS providers occasional use of their practice i.e. commercial contracts and federations etc.

Following the release of the 2013 Premises Costs Directions, some surgeries are encountering issues where a flat service charge is actually deemed to be premises income by the NHS. The NHS are therefore attempting to clawback some of this money against the practice’s notional rent.

GP Surveyors advise practices that they can reduce the chance of facing these clawbacks if they structure these additional occupations correctly including providing a fully itemised service charge schedule. Practices should also follow the guidelines below:

Already have third parties in your practice? What should you do?

• Speak to GP Surveyors or your primary care surveyor before you submit your CMR1 form. We will help to ensure that your income from third parties is explained accurately and in the correct way to reduce the chance of any NHS clawbacks being made.
• If you have already submitted your form and have received a new Notional Rent figure, consult your surveyor about whether your rent reimbursement is correct (whether there is evidence of any clawbacks or not).GP Surveyors will assess your rent reimbursement for free. We will only charge if we are successful in an appeal on your behalf.

Considering bringing third parties into your practice? What should you do?

We understand that these warnings may put you off taking on non-GMS/PMS work at a time when the NHS are in fact encouraging surgeries to operate more of a ‘one-stop-shop’. However, you don’t need to avoid this altogether. Just make sure that you consult your specialist surveyor beforehand. GP Surveyors can advise you on whether your plans are financially viable and the best way forward – allowing you to offer more services from your practices without the worry of NHS clawbacks further down the line.

GP Surveyors has dealt with a number of cases over the last year where the NHS has tried to clawback money from practices who provide space to a third party. These have had a successful outcome following our negotiations with the NHS.

For further advice, please contact the GP Surveyors team.

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GP Surveyors has negotiated some very large rent reimbursement increases for GP surgeries in Northern Ireland over the past year (above the figure calculated by the District Valuer) – with increases being 5 times that of the UK average. The average increase was 56% which amounts to an average annual increase of £6,830 or £20,490 over the 3 year Notional Rent period. The largest increase was 163%. 

This news follows reports that GP practices in Northern Ireland need a funding boost of 25% in order to achieve parity with surgeries in the rest of the UK.

Paul Conlan, Managing Surveyor at GP Surveyors, said: “Surgeries in Northern Ireland are in desperate need of a funding increase. Therefore, checking your rent reimbursement may be a very good place to start – given our recent figures.”

Summer Hill Surgery in Warrenpoint received an increase of 27% (above the figure calculated by the District Valuer) for a retrospective rent review in 2007. “This amounted to a total increase of £30,600 over the three year Notional Rent period which will have been paid out retrospectively to the practice as a lump sum,” explains Conlan. “This is a huge increase in income for the practice. We are pleased that Summer Hill Surgery has finally received a fair Notional Rent which was comparable with the reimbursement of similar surgeries in 2007.”

Summer Hill Surgery were very pleased by the end result: “Surprised is an understatement!” commented Damian Fearon – Practice Manager at the surgery. “We were astonished and delighted!

“As a one off payment it is a significant windfall for the owners. Furthermore, it now places a realistic capital value on the premises, and offers a significant increase in rent over mortgage surplus moving forward.” (Click here to read our case studies).

One surgery also benefitted from moving from Cost Rent to Notional Rent. GP Surveyors advised that a transfer to Notional Rent would be financially beneficial and the practice received a reimbursement increase of 163% as a result.

Conlan explains that the process of getting such a good result for these Northern Ireland practices has not been easy: “We have to assist GP practices to ensure that they receive a fair and accurate rental reimbursement that is based upon fact and appropriate valuation methodology. However, despite all the compelling evidence that we put forward to the Health Board representatives, we were met with a lot of resistance to our approach. The process was therefore slower than in other areas of the UK and legal input was required in order to get a fair result.

“I would therefore encourage other doctors’ surgeries in Northern Ireland to seek advice from a specialist surveyor in order to check whether their rent reimbursement is at the correct level.”

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GP Surgeries who lease space to a pharmacy could be leaving themselves open to a major rent shortfall, losing out on up to £200,000 if they do not carry out regular reviews of the rent that their pharmacy tenant pays. 

This warning is issued by GP Surveyors who carry out pharmacy rent reviews on behalf of GP practices nationwide.

Between 2012 and 2014, GP Surveyors negotiated average pharmacy rent increases of 49%. This amounts to an increase in income of £7,990 per year or £199,750 over a standard 25-year pharmacy lease.

Chris Johnson, director at GP Surveyors, says: “These new figures show that many pharmacy tenants are still paying far too little rent to their GP landlords. £200,000 is a huge shortfall figure which would play a significant part in helping GP surgeries across the country who are struggling financially.”

Johnson explains why there is often such a shortfall: “The problems often start at the beginning of the occupancy. In many cases, a pharmacy company will approach a GP surgery asking to rent space at a rate that is higher than the Notional Rent currently being achieved for the space. In addition to this, the amount of floor space that a pharmacy needs to operate is very small. Therefore, the rent being offered by the pharmacy sounds very attractive and many practices will sign up to a lease without seeking professional advice.

“If advice had have been sought, it is possible that a much higher rent could have been negotiated, along with a one-off premium payment and an agreement from the pharmacy to fund any changes required to the fabric of the building to allow the pharmacy to be best accommodated within the premises.

“At this stage, it is also pertinent to ensure that there is appropriate rent review provision within the lease. This means that the GP practice can review the rent at various points throughout the duration of the lease to ensure that it remains in line with the market and patient numbers etc.

“It is important to note that it is possible to review the pharmacy rent retrospectively if you have forgotten to action a rent review in the past. If it was found that the pharmacy was paying too little, the pharmacy would have to pay this shortfall to the practice. This is normally plus interest – depending on the interest provision outlined in the lease.”

Johnson stresses the importance of getting professional representation: “Pharmacy companies are businesses who will be professionally represented by surveyors whose job it is to keep the rent as low as possible and minimise the liabilities to the pharmacy. Therefore, GP practices also need professional representation in order to get the best deal. £200,000 is a lot of money to lose out on!”

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