GPs consider court action as premises costs threaten practice viability

Dozens of GP practices based in premises owned by NHS Property Services (NHSPS) are considering legal options in response to new lease terms they are being asked to sign.

A number of practices in the south of England as well as a large multi-practice commercial provider are taking legal advice in response to new terms that may be less favourable and which seek to formalise huge service charge hikes some practices have seen.

Practices in health centres with historically informal arrangements with NHS Estates have been handed draft heads of terms for new leases, negotiated with the BMA. But some face huge increases in service charges for parts of their premises they share with other occupants, and less favourable terms.

Some practices have received invoices that include charges for services they don’t receive or have never previously been charged for. Additionally, some practices face big increases in facilities management bills from NHSPS for the areas of the premises they use exclusively.

GP premises

LMCs have warned the increased charges could leave 10% of practices in England unsustainable, with five- or six-figure bills. Around one in five GP practices nationally are in NHSPS properties - suggesting half of these practices are at risk.

The changes are being implemented by NHSPS because it was required by the government - which owns it - to operate on a commercial basis and end historic subsidies for practices in NHS-owned premises. Changes could also see some practices paying less as the landlord works out what share of each premises individual practices use.

Dr Gaurav Gupta, chair of Kent LMC where around 36 practices are affected by the new leases, said no practice ‘in their right mind’ would sign the new lease terms until the issue of increased charges is resolved. Dr Gupta said his own Faversham Medical Practice is at risk of destabilisation and service cuts because of a 400% increase in charges demanded by NHSPS, from £15,000 in 2014/15 to £80,000 last year.

GPonline has learned that a number of practices across the country are considering legal action over their leases. Lawyers have advised GPs they may be able to apply through courts for more favorable terms. Under the Landlord and Tenant Act occupiers paying rent and with exclusive possession of a premises for six months or more can ask the court to formalise their tenancy on their existing terms.

Health service property lawyer Edwina Farrell of Weightmans told GPonline some practices had been offered leases that make them responsible for much more significant repairs to badly maintained premises. ‘That is a less favourable position than a practice might currently enjoy if what they've had in the past is use and occupation of a few clinical rooms and no responsibility for the costs of maintaining the structure of a building for example,' said Ms Farrell.

Service charges

‘Practices need to be rigorous in obtaining an understanding of what terms they have enjoyed in the past, especially where they do not have a written lease. Past conduct can inform whether there is a current duty to pay the sums being levied,' she added.

Lawyer Nathan East, also of Weightmans, said parts of the estate inherited by NHSPS had been previously mismanaged and were in some cases ‘dilapidated’.

‘While [NHSPS] is saying, "we are now commercial and would like to run the estate as such", there are significant issues for tenants if in trying to achieve [that] they are being required to pay for services that there is no contractual agreement to pay,' said Mr East. ‘Occupiers are understandably saying, "we have never paid for these services and as it’s your asset, you should pay for it".

'So, there is a bit of an impasse. Part of the pressure is created by the fact that NHSPS was always supposed to be self-funding. So, the only way it will acquire the money to make the necessary repairs, is from its occupiers.’

Mr East claimed additional problems had been caused by NHSPS contracting external facilities management companies to provide services across broad parts of its estate portfolio. Some practices, he said, had received invoices which contain sums that are not relevant or appropriate to their building. Mr East said this had been caused by some costs being apportioned across the estate as a whole rather than each practice being individually assessed.

GP lease agreements

Properties, he said, should be individually assessed to see what service each practice requires and receives. NHSPS says practices’ facilities management charges should not be being broadly apportioned and it is undertaking a detailed assessment of what practices are using.

Mr East said that there had been a lack of understanding historically of who received what. ‘There is difficulty in identifying what services have been delivered because the record keeping in the past was so bad,’ he said.

Mr East and Ms Farrell are currently advising a large number of practices on the possibility of legal action. GPs could ‘seize the initiative’, Ms Farrell said. Practices would have to demonstrate exclusive use of their premises and prove they have paid rent for a set period to establish an ‘implied periodic tenancy’. They could then apply to the court for a new tenancy ‘based largely on those terms, but asking the court to consider granting a longer period for the lease’, Ms Farrell added. The process is not expensive and could ultimately save practices ‘huge sums’, the lawyers said.

Dr Gupta said he could not comment on individual practices’ decisions about legal options, but confirmed the LMC had sought legal support for practices and that 'all options are open' regarding the possibility of joint action.

In a letter last month GPC premises lead Dr Ian Hume advised practices that heads of terms issued by NHSPS were not enforceable but a ‘first step to negotiation’. The GPC’s position, Dr Hume added, was that practices must be satisfied that charges are reasonable before making payments. Transitional arrangements offered by NHSPS, the letter said, should only be entered into once practices are satisfied with lease conditions.

In the GP Forward View published in April 2016 NHS England promised it would introduce transitional support for practices facing a significant increase in the costs of facilities management on leases held with NHS Property Services.

A spokesman for NHS Property Services said: 'We are working closely with NHS England and Faversham Medical Practice, where subsidy arrangements have changed, to see how we can help their situation.

'Nationally, we have been getting better information about the space our customers actually occupy and this is one reason why some are seeing costs increase and others reduce.

'We want to explain any changes fully and make our bills more understandable. We know we’ve got some way to go on this but we are making improvements. Every penny we generate is reinvested back into the NHS.'

Photo: iStock

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