NHS property news 27th November 2014

NHS Property Services will launch a root and branch programme of modernisation across its circa £3bn estate next week aimed at in particular tackling its landlord-tenant relationships, which at the moment mean an estimated 70% of its properties do not have documented leases in place.

  The property programme launches on Monday 1 December and focuses on the part of the NHS estate owned by NHS Property Services. The programme will make transparent for the first time the actual cost of running the estate of around 7,000 occupancies – in offices, hospitals, health centres and GP practices, for example – so that informed decisions can be made about the most effective and efficient ways to deliver patient care. Of the occupations, 934 relate to GP practices.

The programme will involve staff meeting with tenants to review the space they occupy and the services they use. This will provide the basis for agreeing heads of terms of occupation. NHS Property Services, which owns and manages around 10% of the NHS estate in England, was set up in April 2013 to bring best practice to the management of the primary care estate.

The ultimate aim was to drive out duplication and wastage in property costs and to reinvest savings in modern buildings and improved patient care. In the first 18 months of operation, NHS Property Services said it has already reduced wastage without compromising patient care. It said: “Issues being tackled include disposing of empty buildings that are costing money to mothball, old buildings that are expensive to clean and maintain, unused space that could be let to other service providers and services that are more expensive than are needed by occupiers.” A comprehensive programme designed by NHS Property Services will address these issues by applying industry standard best practice guidance issued by such bodies as the Royal Institution of Chartered Surveyors and the British Institute of Facilities Management. In doing so, it said the programme will also provide the clarity and security sought by most occupiers.

NHS Property Services professionals and their consultants will visit each property and meet with all individual occupiers in order to: • Survey all buildings and prepare accurate floor plans; • Verify all information held about individual properties and store it in a consistent way; • Reach agreement for space used and the basic terms on which it is occupied, such as the appropriate level of rent and the length of a tenancy; and • Reach agreement over the services to be provided for each occupation and the cost of those services. 70% of properties do not have documented leases

The position inherited by NHS Property Services in April 2013 was that information was stored in different ways by the 161 organisations that previously owned these buildings, two thirds of landlord-tenant relationships were undocumented and only a small proportion of services were provided to occupiers under contract. In order to maintain stability across the reformed health service, these arrangements were left in place, by agreement with the Department of Health and NHS England, for the first year of NHS Property Services’ operation.

The facilities management services currently provided without contract include such basic matters as refurbishment and maintenance, emergency/on-call repairs, quality assurance, compliance with statutory regulations, non-urgent breakdowns (electrical, mechanical, building), planned preventative maintenance, mechanical and engineering services, grounds maintenance, cleaning, catering, portering and caretaking, waste management, pest control, security services, reception staff/centre management and car park management. For some occupiers, formalising their tenancies may involve a change to the basis on which their rent is calculated at some point in the future from one which simply recovers the current property costs to a market rent, based in each case on an up-to-date professional valuation of the property, which, for GPs, will be by District Valuer Services.

Market rents have the major advantage for the NHS that they will raise the funds needed for long-term refurbishment and replacement of each property and will also allow for a rebalancing of the cost burden within the health service. GPs will be covered for any increase in rental costs endorsed by District Valuer Services and supported by a lease. No occupier will be expected to sign a lease or contract for a period longer than their contract to provide NHS services.

Chief executive Simon Holden said: “This is no revolution. It is normal practice. Outside the NHS, building occupiers would expect to have a lease in place giving them security of tenure and defining the terms on which they occupy the space they rely on to provide their services. They would expect some building services to be provided by their landlord as part of their obligations under the lease and they would want clarity on exactly what services they were paying for. We are custodians of a vital part of the NHS estate and this is what taxpayers would expect us to do to bring transparency, certainty and clarity for the first time to the relationship between landlord and occupier.” “There is acknowledged to be a backlog of major decisions about modernisation and investment in the primary care sector. Making those decisions requires a strategic overview so that services can be coordinated and investment prioritised. We can bring the transparency to our estate that allows those strategic decisions to be made. We can give occupiers the clarity to make their own decisions about where they are best based – whether they want modernisation of their existing buildings or relocation into shared and perhaps brand new health facilities. At the moment such decisions are based on assumptions and many of the assumptions are wrong.”

NHS Property Services is wholly owned by the Secretary of State for Health. It owns the legal title to assets worth £3bn and employs more than 3,000 staff across England. It began operating on 1 April 2013 and was set up to manage around 10% of the NHS estate, previously managed by Primary Care Trusts and Strategic Health Authorities. This covers some 4,000 properties from GP surgeries and health centres to administrative buildings. Around 70% of the estate comprises buildings that are used for clinical purposes.