Posted on 08 November 2011.
Tom Mason MRICS writes: Many surgeries provide space for community health uses such as health visitors and midwives, occupied under a lease agreement or reimbursed via Notional Rent.
In order to cut costs, the NHS Trusts are relocating many of these staff to central NHS premises. This can have a ‘double whammy’ effect on the practice: not only is income reduced, but the vacant space is also excluded from the Notional Rent reimbursement. Furthermore, the NHS is increasingly unwilling to agree to any increase in the floor area covered by Notional Rent.
This raises two important issues for practices when faced with a Notional Rent review:
It is important to check what floor area the District Valuer is using even if the total value of the reimbursement seems reasonable. We have had considerable success in reviewing the floor areas used by the District Valuer, achieving an 11% increase over the District Valuer’s initial offer (19% in cash flow terms) for one client, and a 15% increase (32% in cash flow terms) for another. We assisted another client in moving from Cost Rent to Notional Rent, gaining an increase of 20.5% over the District Valuer’s initial offer.
- We have also seen a refusal to pay Notional Rent on rooms which are temporarily unused. Therefore, prior to any review, practices should ensure that all rooms on the premises are put to good use.
Please do call us for initial advice if you are about to undergo a Notional Rent Review.