Do you really need a surveyor to deal with your GP surgery rent review?
It is nearly 3 years since the Premises Directions 2013 introduced a number of changes to the rent review arrangements relating to GP surgeries. This had led to significant changes for GP practices who occupy their practice premises under the terms of a lease. Gone are the days when the District Valuer would give practices the assurance that their rent reimbursement would cover the lease rent whilst acting on behalf of the Primary Care Trust. The arrangements introduced in 2013 require the rent review to be settled between the landlord and tenant before NHS England will instruct their advisor (usually the District Valuer) to review the reimbursement rent relating to the GP Surgery.
Regardless of how you feel about these changes (and most GP practices have always been opposed to them), it is probably fair to say that these arrangements are unlikely to be reversed which means that GP practices need to decide how best to manage the rent review process in its current iteration.
So what are the options open to the GP tenants at rent review?
1. Manage the process yourself
It is fair to say that there is some logic to this approach, given that most GP surgery leases will contain a provision limiting the lease rent to an amount no greater than the equivalent of reimbursement rent. Given this protection, surely it is reasonable to assume that the practice can confidently agree to the rent proposed by the landlord at rent review without the need for representation by a GP Surgery surveyor?
The counter argument to this relates to the fact that the 2013 Premises Directions have introduced arrangements which are inconsistent with many GP surgery leases. In this situation, NHS England will be obliged primarily to the Premises Directions rather than the existing lease arrangements and the reality is that it is full reimbursement of the lease rent that is the priority for GP practices. In the light of this, practices are understandably wary of ignoring the effects of these changes.
2. Appoint a surveyor to represent the practice
The justification for choosing this option is that by actively negotiating the market rent with the landlord on behalf of the tenant, the GP practice has a higher level of certainty that there will be no shortfall between the reimbursement rent and the lease rent. A surveyor will also be able to advise the practice in the event that the landlord proposes a side agreement between the parties, which is reasonably common place in these negotiations. A surveyor with expertise within the sector will also be able to navigate a way through the fairly involved appeal and dispute resolution procedures which are frequently needed to protect the interests of the GP practice when assessing the lease and reimbursement rent of their surgery.
Ultimately this decision rests with the practice who will have to balance the risks of not appointing a surveyor against the costs of such an appointment. As a surveyor working within this sector and advising numerous GP practices through the rent review process, I do not claim impartiality in this matter but I do recognise and understand the frustrations of GP practices who could not have any foreseen these property management costs when they entered into the long term lease commitments that are typical in this sector.
For a brief, informal chat about how we may be able to help you, please call Bryan Wootten on 01904 410810 or email us.
If you have any queries regarding the above matter, or any other issues relating to your surgery premises, please contact Bryan Wootten on 01904 410810 or firstname.lastname@example.org