This site is intended for health professionals only

Rule changes could ‘half’ notional rent

15 April 2014

Share this article

GP surgeries valued on an ‘alternative use’ basis could lose half of their notional rent, a surveying company has warned. 

Changes to the  Premises Costs Directions which came into effect in April 2013 mean that GP premises must only be valued as a surgery. 

GP Surveyors warns this could mean the notional rent would be cut by as much as half. 

Alternative use valuations are commonly used in high value office districts, residential areas or shopping parades. 

Andrew O’Dowd, director at GP Surveyors said: “In situations like this, the GP premises would be correctly valued by looking at comparable office, residential or retail rents rather than comparable GP surgery rents.

“We have a number of GP clients whose triennial notional rent reviews are looming and we are extremely concerned that their reimbursement will be reduced so dramatically that it will be impracticable for their surgeries to remain open. Not only this, in all instances, it would make more commercial sense for these GPs to sell their premises and cash in on the higher values that these competing bids (alternative uses) would attract.”

The Premises Costs Directions 2013 are also causing issues for GP surgeries with tandem car parking spaces (spaces where staff can double-park) and air conditioning.

He said: “NHS England used to properly reflect tandem car parking spaces  and quality-enhancing air conditioning when calculating Notional Rent Reimbursement. However, these elements are now categorically excluded, causing reductions in reimbursement. These are features that have come about due to increasing demand so it stands to reason that they add value to the premises. 

“I would add that this isn’t having such damaging effects as the ‘alternative use’ issue, however even the smallest decrease in income is significant for GP practices at the moment.” 

GP Surveyors has encouraged NHS England to consider the clauses preventing ‘alternative use’ valuations and the clauses which remove tandem spaces and air conditioning from Notional Rent valuations. 

The organisation argues that the clauses are putting GP surgeries “at risk of closure at a time when more and more services are being demanded from primary care”.