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How have the premises cost directions changed?

Practices will be able to access grants for 100% of the cost of improving or updating their building under long-awaited changes to the premises cost directions, which have been announced as part of the GP contract deal for 2018/19.

Practices can receive grants for 100% of the cost of improvements under the new directions (Photo: iStock)
Practices can receive grants for 100% of the cost of improvements under the new directions (Photo: iStock)

Until now practices have only been able to claim grants for 66% of the cost of any premises projects. GPs have also been handed further freedoms in how they use the grants - practices will now be able to use this funding to purchase land to extend their premises.

The new premises cost directions have also set out ‘explicit options’ for GPs who find themselves in a ‘last partner standing’ situation if they are in receipt of a premises grant (see box below).

Rent reviews

Under the new cost directions rent reviews will not require practices to undertake their own valuation of their premises. Practices will just need to provide evidence of a negotiation with their landlord and if this is unsuccessful the District Valuer will assess the valuation.

Landlords will also not be able to use rent reviews as an opportunity to vary lease terms.

Other changes to the premises cost directions

  • All new terms will be prospective and cannot be retrospectively applied.
  • Practices should attempt to ensure that VAT for rent is not passed onto them, but where it is NHS England will reimburse this.
  • More formalised arrangements for third party use of premises with 'no financial disadavantage' to the practice
  • Improved provisions for minimum standards reviews
  • If in receipt of a grant and NHS England and the practice agree a relocation, NHS England will waive the grant agreement and any restrictions.

Medeconomics will be looking in more detail at what the changes mean when the full directions are published.

Wider review of GP premises

As part of the GP contract deal for 2018/19 a major review of GP premises will be conducted by the DHSC and NHS England, starting in early summer 2018.

The review will aim to ensure that premises are fit for purpose in the future and address outstanding issues around development grants and last partner standing situations. Recommendations from the review will be taken into account in any further national premises negotiations.

In a letter to practices, GPC chair Dr Richard Vautrey said: ‘We have secured many positive changes to the premises cost directions. While the changes we have secured are important and positive, we have been very clear that there needs to be a more fundamental review of GP premises, as in many areas of the country it is premises problems that are leading practices to hand back their contracts, as well as this being a major disincentive to becoming a GP partner.’

Last partner standing and grant repayments

If a last partner standing is a premises owner and hands back their contract during the grant’s abatement period they can:

  • Remove the premises from NHS use, sell it and repay the grant
  • Remove the premises from NHS use, retain the premises and repay the rest of the grant
  • Offer continued use of the premises for another practice, in which case the new practice would have their lease amended to take on the rest of the grant.

If a leaseholder is in receipt of a grant and hands back their core contract during the abatement period they can:

  • Assign the lease and any grant agreement to another practice
  • Relinquish the lease if the landlord agrees - and there is the possibility of assistance with any related repayments
  • NHS England could assign the lease to the partner’s nominee
  • There is the possibility for NHS England to waive grant repayment.

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