Premises

1. Why premises are different

Most of what a GP partner signs up to is shared, insured, or reversible. The building is none of those things. Premises are one of the largest personal financial exposures in the whole partnership: a seven-figure asset or a decades-long lease, held in your own names, with joint and several liability attached.

I have held both ends of this. I was a partner in premises the partners owned; today I work in a practice that rents from the local hospital trust. The paperwork is different on each side. The exposure never disappears — it just changes shape.

The state of the estate makes the stakes plain. The Department of Health and Social Care's 10 Year Capital Plan, published in July 2026, records that half of GPs regard their own practice as not fit for purpose and nearly a quarter of GP buildings pre-date the foundation of the NHS itself.

NHS England has looked at taking this problem off partners' hands. Its 2019 premises policy review estimated that buying out the GP-owned estate would cost a minimum of £5–6 billion, and rejected the idea. The estate stays yours, which means the risk does too. This guide is about managing it.

2. Four ways to hold a building

Almost every practice in England occupies its premises in one of four ways. Which one you are in decides which parts of this guide matter most to you.

3. How the money works: the 2024 Directions

The rulebook is the National Health Service (General Medical Services-Premises Costs) Directions 2024, made under the NHS Act 2006 and given to NHS England. They came into force on 10 May 2024(NHS England's own explainer says 9 May, but the Directions' text says 10 May), replacing the 2013 Directions. They are not a statutory instrument, so you will find them on gov.uk rather than legislation.gov.uk.

One scope point before anything else: the 2024 Directions apply to GMS contracts only. PMS agreements are considered under the previous Directions unless the agreement says otherwise, so check yours.

The Directions fund five main streams. Most of what follows hangs off one of them:

The borrowing costs route has conditions worth knowing before you build: three building quotes, three tenders from FCA-regulated lenders, a maximum 25-year term, and a cap at the lower of your actual interest and a prescribed percentage NHS England sets at least annually. You cannot draw notional rent and borrowing costs at the same time, though you can elect to switch to notional rent.

What changed in 2024

• The improvement grant cap went.Grants can now cover up to 100% of a project's cost where appropriate, up from a 66% maximum under the 2013 Directions (section 6).
• VAT on rent is now reimbursed where properly charged and not otherwise recoverable.
• Stamp duty land tax reimbursement on premises acquisition was introduced.
• A new “appointed valuer” (an RICS-registered valuer appointed by NHS England) can now carry out valuations previously reserved to the district valuer.
• Rent-review evidence loosened: evidence of a negotiation with the landlord now counts, with or without a formal valuation.
• Neither NHS England nor your ICB may negotiate directly with your landlord during a rent review.
• LMCs must be consulted on premises development proposals, with at least two weeks to respond.
• A “last person standing” provision appeared, covered properly in section 9.

4. Notional rent in practice

If the partners own the building, NHS England pays notional rent: an annual sum based on the current market rent (CMR) the premises would command. The assessment is done by the district valuer (District Valuer Services of the Valuation Office Agency) or, since 2024, by an appointed valuer.

The CMR is not the rent your building would fetch on the open market on any terms. It is assessed against a notional lease defined in the Directions: a 15-year term, three-yearly rent reviews that never go below the initial notional rent, the landlord insuring and doing external repairs, the tenant doing internal repairs, no service charge, and use restricted to practice purposes.

The review cycle

Notional rent is reviewed every three years. A review is brought forward if the use of the premises changes or if further NHS-agreed capital is invested. When a determination arrives, you have 12 weeks from the invitation to accept or reject it (extendable by agreement). If the new figure is lower and you dispute it, NHS England may pay the lower level while the review concludes, so the clock matters.

If you disagree with the figure

1. Local dispute resolution first. The Protocol for Local Dispute Resolution for CMR applies before anything formal.
2. Then NHS Resolution's Primary Care Appeals service, which adjudicates premises disputes under powers delegated from the Secretary of State.
3. Watch the limitation period: three years from when the matter occurred or should reasonably have come to your attention. For CMR disputes, that runs from when the commissioner reports a CMR you do not agree with.

One point the courts have made that every owner-occupier should know: the district valuer is not independent of NHS England. The High Court recognised this in Primary Health Investment Properties Ltd v Secretary of State for Health (2009), and NHS Resolution's own guidance records it. That is why Primary Care Appeals can appoint an independent adviser from the RICS panel, and why taking your own specialist valuation advice is not paranoia, it is symmetry.

Two smaller mechanics worth knowing. Where public capital has contributed to your building, notional rent is abatedfor a period so the NHS is not paying rent on its own investment (section 6). And if you invest your own capital with NHS England's prior approval, your three-yearly review is brought forward, so approved improvements feed into the rent sooner.

5. Rent reimbursement for tenants

If the practice rents, NHS England reimburses the lower of your actual lease rent or the CMR, plus VAT where it is properly charged and you cannot recover it. Read that rule again, because it allocates the risk: if you agree a rent above what the valuer says the premises are worth, the partners carry the shortfall for the life of the lease.

How a rent review runs

1. You agree a proposed rent with your landlord.
2. You give NHS England the proposal and evidence of the negotiation, which may or may not include a formal valuation.
3. NHS England considers it, taking valuer advice.
4. It confirms the rent at the proposed level or a lower one.
5. You complete a rent review memorandum, or go back and renegotiate.

Throughout this, neither NHS England nor your ICB may negotiate directly with your landlord. The negotiation is yours; the reimbursement decision is theirs. Index-linked reviews (RPI and similar) are honoured only if NHS England saw the lease before it was agreed and approved the indexing. That is another reason the approval-before-signature rule has teeth.

Special cases

• NHSPS and CHP tenants: reimbursement will not fall below the initial rent, a floor the Directions provide for these landlords specifically.
• PFI and LIFT buildings: NHS England pays what it considers reasonable, with valuer advice.
• The premium rule: if a premium was paid to suppress the rent below market level, reimbursement is at CMR rather than the suppressed rent.

6. Improvement grants

The 2024 Directions removed the old percentage cap on premises improvement grants. NHS England's guidance now describes assistance of up to 100% of the total cost of a premises development or improvement, where appropriate, up from a maximum of 66% under the 2013 Directions. For a partnership weighing whether to fund works itself, that changes the arithmetic.

What qualifies — and what never will

Eligible projects (direction 8) include extensions, improved access, lighting, ventilation and heating, car parking, infection control works, and fitting out premises for practices taking tenancies in new developments. The exclusions (direction 9) are just as clear: repairs and maintenance, wear and tear, buying land or buildings (except extensions and fit-out), and purely environmental works unless they carry a net financial benefit to the NHS.

The strings attached

Public money buys a commitment: a guaranteed period of use on a sliding scale, with pro-rata repayment if the premises stop being used for NHS primary medical services early.

Two further consequences of taking public capital. First, abatement: where public capital contributes to an owner-occupied building, notional rent is reduced for the abatement period, then resumes in full: the NHS will not pay you rent on its own investment. Second, the flip side: fund an approved improvement with your own capital and your notional rent review is brought forward to capture the uplift.

New in 2024, and easy to miss: SDLT reimbursement on premises acquisition. The Directions also cover legal and professional fees (including VAT) on new or significantly refurbished premises. Ask about both before your accountant assumes they are sunk costs.

7. Leases: what you are actually signing

A GP premises lease is not background paperwork. It is a personal, long-term financial obligation, and a common commercial lease form, the full repairing and insuring (FRI) lease, puts the whole cost of repairs on the tenant. Combine that with joint and several liability and the position is stark: the landlord can pursue any one named partner for 100% of what is owed, and a partner's name on a lease keeps its obligations until it is formally removed.

Before you sign anything

• Schedule of condition. Insist on one, annexed to the lease, so your repair obligation excludes disrepair that pre-dates you. Without it, an FRI lease can oblige you to hand back a better building than you took on.
• A break clause tied to the core contract.The BMA's advice is explicit: if you lose your core contract, you lose your entitlement to reimbursement, so you should have the option to break the lease if that happens. The BMA/NHSPS template lease includes exactly this break right.
• Rent that tracks reimbursement. Payments under the lease should reflect what you can claim, with shortfalls capped. Avoid unusual rent-review indices that could leave the contractual rent above what the district valuer will reimburse.
• Assignment and sharing rights. Partner changes may need landlord consent, and departing partners are sometimes asked to guarantee their successors through an authorised guarantee agreement (AGA). Some leases mandate a minimum number of tenants, a trap when the partnership shrinks. Get express rights to share occupation with NHS bodies, PCN employees, and contracted providers.
• Registration and tax. Leases over seven years must be registered at the Land Registry, and SDLT applies.

Personal covenants are standard in this market, so treat every partnership change as a lease event: document it by deed of variation, AGA, or release, joining the incoming partner and releasing the outgoing one at the same time.

Dilapidations: the bill at the end

The landlord's claim for putting the building back into the state the lease required usually lands at the end of the term, and it can be the largest single premises bill a partnership ever faces. Specialist advice from Hempsons is practical: build a repair fund through the term rather than facing the bill cold, and investigate the landlord's intentions: a landlord planning to redevelop may have no real loss. A diminution valuation under section 18 of the Landlord and Tenant Act 1927 can cut an inflated schedule down substantially, sometimes to zero.

8. Service charges and the NHSPS story

Start with the general law, because it protects every tenant regardless of landlord: no tenant is obliged to pay a service charge except to the extent the lease provides for it. If your lease has expired but you remain in occupation with security of tenure under the Landlord and Tenant Act 1954, the original terms continue. Management fees must be fair and reasonable, in line with the RICS code. And if you have paid charges your lease never provided for, recovering them is a live question worth putting to a solicitor.

The NHSPS dispute, briefly and fairly

In 2013, around 3,600–3,700 former primary care trust properties transferred to NHS Property Services. In 2016, NHSPS introduced its Consolidated Charging Policy, which sought full cost recovery, and for many practices service charge bills rose. Five practices supported by the BMA (Valley View, St Andrews, Coleford, St Keverne, and Bushbury) took the question to the High Court.

The judgment of 8 June 2022 (Valley View v NHS Property Services[2022] EWHC 1393 (Ch)) gave both sides something. For the practices: NHSPS had already conceded in 2019 that its charging policies did not, by themselves, alter any tenancy's terms: a policy document cannot rewrite your tenancy, and each practice's liability turns on its own facts. For NHSPS: the court held it could recover the landlord's reasonable costs of services reasonably provided, including management fees it had not previously charged, and the practices' arguments that their liability was capped or their rent all-inclusive failed. The court analysed each occupation on its own facts (tenancies at will and implied tenancies among them), which is precisely why the terms of your own occupation matter so much.

The second trial, on how much was actually owed, never happened: the parties settled out of court in 2023, with combined reductions of more than £750,000 across the five practices: individual reductions from £25,000 to over £400,000, one claim cut by more than 80%, covering charge years 2013/14 to 2019/20. Specialist firm Lester Aldridge's reading is the sober one: a settlement establishes no sector-wide precedent. Your position still depends on your own tenancy.

What the BMA advises NHSPS and CHP tenants now

• Only pay charges whose legal basis and accuracy you accept.
• Do not sign a lease until the liabilities are fully understood. A written lease is not generally necessary, and you should not be forced into documents that jeopardise existing protections.
• Be cautious with facilities-management service level agreements and “charters”.
• You may contract alternative service suppliers, but tell NHSPS first.

Community Health Partnerships, the DHSC-owned company that manages the LIFT estate, charges on a cost-recovery basis under your lease, or as a floor-space percentage where there is no lease. Rent, rates, water, and clinical waste remain reimbursable in the usual way, and the BMA's guidance above applies to CHP tenants too.

Renting from an NHS trust

Some practices rent from an acute or community hospital trust. Mine is one; I write this subsection from inside the arrangement. And here is the finding from researching this guide that surprised me most: there is no dedicated national guidance for practices renting from NHS trusts. None. NHSPS and CHP tenants have BMA guidance, a template lease, and a High Court case behind them. Trust tenants have general principles.

Those principles do still work. You owe only the charges your lease or tenancy provides for. The lower-of rule reimburses your rent whether the landlord is an NHS body or a private owner. NHS England's 2019 review names trusts among the potential holders of assigned GP leases, so the arrangement is recognised — it is just not catered for. Treat it as a commercial tenancy with an outsized landlord: settle the terms before signing (section 5), check every charge against them, and use your LMC early when something does not add up.

9. Last man standing

Every premises risk in this guide concentrates into one scenario: partners retire one by one, nobody new takes on the property, and the last names left on the title or the lease carry everything. NHS England's own 2019 premises review recognised partners being “trapped” this way (its term) and noted that tying building ownership to contract delivery can contribute to negative equity and last-partner-standing situations, while long leases are off-putting for GPs who are closer to retirement than to the end of the lease term.

How it arises

• Owner-occupiers: when the last property-owning partner retires and the remaining partners decline to buy, the continuing practice can find it has no right to keep using the building. The options (sale-and-leaseback to an investor, a lease from the retired owners to the partnership, or a third-party sale) all take time, lender consent if there is a mortgage, and NHS approval if the new rent is to be reimbursed.
• Leaseholders: a partner named on a lease remains personally bound by its covenants after retirement unless formally removed. As partners leave without being replaced on the lease, the covenant pool shrinks until one or two people stand behind the whole term.
• No partnership deed:the accelerant. Without a deed, a single retirement can dissolve the partnership, and with it the practice's NHS contract. BMA Law's description of the result is hard to improve on: liabilities fall on the shoulders of a few just because they were last to hand in their notice. The fear of that drives defensive, domino-effect exits.

What the Directions actually offer

The 2024 Directions contain a new “last person standing” provision. Direction 54 says that where a retiring leaseholder cannot secure a successor or an assignee, “NHS England must produce a protocol setting out the criteria for determining whether or not to recommend that the lease should be assigned to any nominee of NHS England”.

Read that carefully. It is a protocol, about a recommendation, about a possible nominee. It is nota guarantee that the NHS will take your lease off your hands, and the Directions only oblige NHS England to produce the protocol, so ask your LMC what actually exists before you plan around it. Alongside it, NHS England's guidance lists the realistic exit routes for a leaseholder: assignment to another practice, surrender if the landlord agrees, assignment to an NHS England nominee, or a repayment waiver. For owner-occupiers, grant repayment can be suspended for up to two years while a sale is actively pursued.

NHS England's stated direction of travel is also worth knowing: it expects and will encourage separating premises ownership from partnership entry, with the owner–partnership relationship formally documented. If your building is held by former partners or a separate group of owners, that documentation (a lease or declaration of trust, approved so the rent is reimbursable) is not optional tidiness; it is what makes the arrangement survivable. The tax and reimbursement treatment of separate ownership structures has no single answer, so take specialist accountancy advice.

Mitigations that appear in real partnership deeds

• A cap on retirements in any accounting period, or a minimum gap between them, so exits cannot stampede.
• An 18-month standstill on retirements after a merger.
• Staged buy-outs, so no single exit demands a lump sum the practice cannot raise.
• A sinking fund against repair and dilapidations liabilities (section 7).
• Break clauses tied to losing the core contract in the lease itself (section 7).
• Lease and title names updated at every partner change: joining the incoming, releasing the outgoing, simultaneously.
• Planning 18 months or more aheadfor the last owner's exit, with the ICB involved early; it may help facilitate an assignment.

One boundary this guide keeps deliberately: where retirement timing interacts with pension decisions, that is specialist territory: take advice from an adviser experienced in NHS GP pensions before fixing dates.

10. Buying in and buying out

Sooner or later every property-owning partnership runs the same transaction: a retiring partner's share out, an incoming partner's share in. Done well it is routine. Done without the paperwork in place, it is where valuation disputes, lender surprises, and, at the extreme, criminal law live.

Valuation

GP premises are a specialist asset: surveyors who know the sector value them on the practice's rental income stream (the notional rent) under RICS Red Book rules, using comparable GP rental evidence. A general high-street valuation can be badly wrong in either direction. The partnership agreement should fix the valuation methodology and the mechanism for appointing the surveyor before anyone announces a retirement, along with who must sell, who may buy, and the repayment timescale, balancing rapid settlement for the leaver against the financial stability of the practice. Buy-ins can be softened by staged payments or by funding from undrawn profits, and historic liabilities such as dilapidations or old cost-rent overpayments should be ring-fenced to the partners who incurred them.

The mechanics nobody warns you about

• A retiring owner signs a TR1 to come off the Land Registry title.
• The lender must consent to releasing them, or the remaining partners refinance. Watch for early-redemption penalties.
• Incoming partners face lender due diligence that takes weeks, so start it early.
• Names on a lease need removing and adding too, with landlord consent, and sometimes an AGA from the leaver (section 7).
• SDLT can be triggered by a retirement, another reason the accountant is in the room from the start.

The goodwill boundary

Under section 259 of the NHS Act 2006it is unlawful to sell the goodwill of a medical practice, and Schedule 21 makes it a criminal offence, punishable by a fine calibrated to strip out the benefit plus £500, or up to three months' imprisonment, with prosecutions requiring the DPP's consent. The part that touches premises deals is the deeming provision: a premises sale counts as a sale of goodwill where the seller knew the buyer intended to practise from the premises and the price substantially exceeded what the premises would fetch had they not previously housed a medical practice.

One reassurance for owner-occupiers winding down: under the 2024 Directions, a practice ceasing its contract need not repay improvement grants where the premises are sold, leased, or assigned to another provider of primary medical services who honours the original grant conditions, and any repayment cannot exceed the sale price or a reasonable open-market value.

11. What's coming

After years in which premises policy barely moved, the 2025–2026 announcements matter, though mostly at system level rather than as cheques to practices. The 2026/27 contract itself made no changes to premises reimbursement rules; its only premises element is uplift funding covering cost growth pressures, including premises cost inflation.

The capital taps, reopened

The Primary Care Utilisation and Modernisation Fund put £102 million of new capital into primary care estates in 2025/26 (the first dedicated national fund since 2020), allocated to ICBs by weighted population. By July 2026, the 10 Year Capital Plan reported it had supported over 790 capital investment projects, enabling around 9 million clinical appointments, and promised £200 million of further investment this Parliament.

Neighbourhood health centres

The plan is 250 neighbourhood health centres by 2035, 120 operational by 2030, funded by around £200 million of public capital to 2030 alongside public–private partnerships, with only 20% of new builds publicly funded. Wave 1, announced on 26 March 2026, is 27 centres due to open by 2027, described as the first of 50, repurposing NHSPS and LIFT buildings in the most deprived areas. The detail that matters for partners: NHS England's guidance says every centre must include on-site general practice as a core element, operating at the scale of a PCN.

And a new duty pointed at your building

From April 2026, NHS England's planning framework expects ICBs and providers to identify GP practices where demand is above capacity and create a plan to help decompress or support them. If your waiting room is the evidence, that duty is your opening line with the ICB estates team.

What this means if you are weighing a premises decision

• Capital flows through ICBs, by weighted population, not automatically to practices. Your route in is the ICB estates plan: get your project on it, in writing, early.
• The direction of travel is bigger, shared, mostly leased buildings. Before committing personal capital or a 15-year lease, stress-test the decision against a possible neighbourhood health centre in your patch, especially if you occupy NHSPS or LIFT premises, which is where wave 1 is being built.
• Grants of up to 100% change the self-funding arithmetic (section 6), but bring guaranteed-use commitments of 6 to 18 years, which is itself a succession decision.
• If your building is over capacity, say so now. The April 2026 duty gives your ICB a reason to listen that it did not have before.

12. Check your premises risk

Sixteen questions distilled from everything above: the ones I would want answered about any practice's premises position, including my own. Answer for how things stand today.

13. Practice action checklist

Eight actions that close most of the gaps in this guide. Your ticks are saved in your browser only.

• Review the premises clauses in your partnership agreementBuy-in obligations, valuation method, payout timescale, retirement limits. Do this with a specialist GP solicitor.
• Check the names on the title and the leaseCurrent partners only. Remove leavers and add joiners at every partnership change.
• Diarise the rent review cycle and the 12-week windowCMR determinations must be accepted or rejected within 12 weeks of the invitation.
• Get NHS England's confirmation before signing or varying a leaseReimbursement depends on NHS England being satisfied before the lease is agreed or varied, not after.
• Check every service charge bill against the lease before payingYou owe only what the lease provides. Query anything without a clear legal basis.
• Ask for a schedule of condition and a core-contract break clauseIn any new or renegotiated lease. The BMA/NHSPS template lease includes both.
• Start a sinking fundFor dilapidations and repair obligations that no reimbursement stream covers.
• Plan any last-owner transition at least 18 months ahead, and start early on lease exits tooTalk to your ICB early, and take specialist advice before any buy-in, buy-out, or sale-and-leaseback.

14. Glossary

Related guides

15. Sources and further reading

• The National Health Service (General Medical Services-Premises Costs) Directions 2024 (gov.uk)
• NHS England: Guide to the changes to primary care premises policy (November 2024)
• NHS Resolution: guidance note on premises costs — current market rent disputes
• NHS Act 2006, section 259 — sale of goodwill prohibition
• NHS Act 2006, Schedule 21 — prohibition of sale of medical practices
• NHS England: General Practice Premises Policy Review (June 2019)
• DHSC: 10 Year Capital Plan for Health and Social Care (July 2026)
• DHSC: Primary Care Utilisation and Modernisation Fund 2025 to 2026
• DHSC and NHS England: Neighbourhood Health Framework (March 2026)
• NHS England: neighbourhood health centre guidance for regions and integrated care boards (April 2026)
• gov.uk: Communities to benefit from health centres on their doorstep (March 2026)
• NHS England: Medium Term Planning Framework 2026/27 to 2028/29 (October 2025)
• BMA: rent reimbursement for GP practices
• BMA: a guide to GP premises leases
• BMA: service charges for GP premises
• BMA: NHS Property Services
• BMA: template GP premises lease
• BMA: the importance of an up-to-date GP partnership agreement
• Falcon Chambers case note: Valley View v NHS Property Services Ltd [2022] EWHC 1393 (Ch)
• BMA Law (specialist solicitors): avoid being the last partner standing
• Mills & Reeve (specialist solicitors): last man standing — what GP partners need to know
• Hempsons (specialist solicitors): last of the GP property owning partners
• Hempsons (specialist solicitors): five essential tips for GPs to manage lease dilapidations
• Lester Aldridge (specialist solicitors): NHSPS service charge settlement — where do GP practices now stand?
• Birketts (specialist solicitors): technical considerations in GP leases
• GP Surveyors (specialist surveyors): partnership retirement — GP premises valuation
• DR Solicitors (specialist solicitors): GP retirement checklist (hosted by Leicester, Leicestershire & Rutland LMC)

Last reviewed: 10 July 2026. All links checked at that date.

Built by an NHS GP partner who has been both a premises owner and an NHS-trust tenant. General information, not legal, financial, or tax advice.