Premises Cost Directions and valuing your GP premises

Valuing GP premises

Which Premises Cost Directions does your practice fall under and why is this so important?

 

GP Surveyors receive many queries regarding surgeries rent reviews and valuations and a common area of confusion is which Premises Cost Directions apply to practices. The Directions adopted when valuing GP premises is important because it can directly affect the amount of rent reimbursement the surgery is entitled to receive.

 

Alternative use value

The most significant difference between Directions is the consideration of alternative use value. The 2004 Directions permit alternative use, meaning premises can be valued for practice purposes and any other purpose for which planning permission has been granted or might reasonably be expected to be granted. This difference is fundamental to how many surgeries are valued, particularly in high value areas. These practices could significantly benefit from being valued on an alternative use basis, simply because residential or commercial properties are more valuable than surgeries in certain areas.

In some case’s surgeries that have been historically valued on an alternative use basis, under the 2004 Directions, may have had their Current Market Rent (CMR) substantially reduced under the 2013 Directions. To avoid such a scenario, it would be prudent for practices to seek advice from a specialist primary care surveyor before submitting their CMR1 form or agreeing to the NHS rental reimbursement figure.

Tandem car parking and air conditioning

Other key areas that are eligible for reimbursement under the 2004 Directions and not the 2013 Directions include air conditioning and tandem car parking (where a car is blocked in by another car and can’t be moved in isolation). The inclusion of these features in a surgery rental valuation can make a significant difference in rental reimbursement for a practice.

 

When do the 2004 or 2013 Directions apply?

Although the 2013 Directions are the most recent version, this does not mean that they automatically supersede the 2004 Directions. In most cases, when valuing GP practice premises, the 2004 Directions can be applied to properties built before 1st April 2013 and those built after this date can adopt the 2013 Directions. As per the transitional arrangements stated in Section 56 of the 2013 Directions.

 

Applying for NHS rent reimbursements

GP Surveyors have become aware of practices receiving letters from the NHS that muddy the waters in terms of which Directions apply to their surgery. The NHS’s letters simply fail to recognise the transitional arrangements stated in the 2013 Directions and this can lead to practices believing they automatically fall under the 2013 Directions. In some cases, the letters are accompanied by an application form, stipulating the practice is applying for rent under the 2013 Directions. Therefore, applying for funding could be deemed to move any surgery on the 2004 Directions to the 2013 Directions.

It is imperative to be aware that once a GP practice agrees to a variation, in what is reimbursable, it can become binding and incredibly difficult to reverse. Before completing your surgeries rental application, it would be prudent for your practice to seek independent, specialist advice.

 

If you would like expert advice concerning your rent review or the Premises Cost Directions, please contact GP Surveyors and one of our specialist team will be able to advise you on the best course of action.