So why have Health Centre Service Charges become so problematic? | Wootten Dean
As a surveyor whose primary role is to represent the interests of GP practices, this subject creates something of a dilemma for me. One the one hand, I understand the reaction of GP occupiers who have been asked to incur large service charge increases over the past couple of years with very little notice and at a particularly challenging time for them. On the other hand, as a surveyor I understand the a landlord has to recover the costs that relate to the services he provides to occupiers of the buildings within his portfolio.

The background

I do think it is helpful to understand some of the background to the current situation in the hope that it sheds some light as to why this issue has become so significant; no one is pretending that service charges will ever be popular with building occupiers, but the disputes that have arisen since NHS Property Services introduced the current regime of service charges suggest more than just landlord and tenant run-of-the-mill disagreements.

In this context the following issues appear to be relevant:

  • Many GP practices have occupied Health centres and other community buildings for decades without incurring any service charges as a result of their occupation. Whilst I happily accepted that from an NHS perspective, this was an issue that had to be addressed, for many GP practices this was the basis upon which they took occupation of the premises and as such has been understood to be the agreed arrangement between the parties. When the landlord unilaterally begins to charge GP practices for the services they have always delivered to them without charge, it is seen as a departure from the occupational arrangements implicitly agreed between the parties over many years.
  • Very few GP occupations of Health centres have leases in place. Leases are the most commonly used mechanism for giving a landlord authority to charge tenants for the delivery of services; they also provide the details of the services that will be provided and charged for as part of the service charge arrangement. Without a lease in place there is no such detail, which inevitably means that assumptions are made as to what can reasonably be included within a service charge. Whilst it is acknowledged that NHS Property Services are in the process of putting leases in place, in most situations there have been 2 years of service charges imposed on GP practices without the appropriate legal authority or framework.
  • Many of the building maintenance and management contracts included within the service charges have been inherited by NHS Property Services by the Primary Care Trusts who were the responsible body until 2013. Whilst there were some good examples of efficient procurement of these contracts within these organisations, it is the case that some of the Trusts did not have the expertise to ensure that value for money was achieved in these contracts; the effect of these ‘less than robust’ procurement processes has been felt in the service charges incurred by GP Practices in the past 2 years.

I recognise that the comments above focus primarily on the issue from a GP Practice perspective. It is not my intention to suggest that the introduction of service charges in health centres cannot be justified, merely to suggest some of the reasons for the implementation being so contentious.

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Wootten Dean is an established property consultancy led by Bryan Wootten who has over 15 years of experience as a valuer and general practice surveyor. Bryan is an RICS Registered Valuer who deals with a range of property types and has a special interest and focus on the NHS primary care environment.