A welcome revolution in the ownership of NHS Community Estate

Published 31 May 2019

New guidance has just been issued by the Department of Health (DoH) which has the potential to revolutionise the ownership of NHS Property Services Limited (NHSPS) and Community Health Partnership (CHP) owned property on NHS Trust estates.

This new guidance states that where property on an NHS Trust estate belongs to either NHSPS or CHP, Trusts now have a right to apply for the transfer of ownership of these properties from NHSPS/CHP to the Trusts themselves.

The reasoning behind such a move is that, following the change in circumstances since the implementation of the Health and Social Care Act 2012 (and in particular the introduction of Sustainability and Transformation Partnerships, which has helped to drive a more collaborative local approach to planning clinical provision and future estate needs), the DoH has believes that NHS Trusts are best placed to judge how to use their estate to benefit the local community.

This will come as a relief to NHS Trust’s given the ongoing issues which Trusts are experiencing with NHSPS around service charges (and increases in costs associated with these), as well as the additional management charges which are being levied on Trusts in defiance of the new RICS Service Charge Code introduced on 1 April 2019.

Properties that are expected to remain in long-term NHS use are eligible for transfer (whereas properties that have been declared surplus will be exempt from the scope of the policy), as such all NHS Trusts (whether Foundation Trusts or otherwise) that have NHSPS or CHP owned property on their estate will be entitled to make an application to the DoH for the transfer of that property.

Detailed guidance has been published on the making of such an application, which will involve the presentation of a formal business case for each property that a Trust wishes to be transferred, setting out the rationale for the transfer and the application will need to be accompanied by an NHS business case checklist. Prior to consideration of the application by the DoH the business case will also need to be endorsed by the Board of the applicant Trust, the relevant Clinical Commissioning Group and the NHS England or NHS Improvement regional team.

Subject to approval of the business case, the Secretary of State will complete a transfer scheme or a shareholder’s resolution directing either NHSPS or CHP to transfer the property to the relevant Trust. It is intended that any transfer will be made at Net Book Value (being the value shown in NHSPS/CHPs’ accounts at the point of transfer) and accounted for as a transfer of function (although more detailed guidance regarding the accounting treatment is expected to be released shortly).

All properties will transfer in their current condition, although it should also be noted that there will be an overage covenant placed on the property in the event of any subsequent sale, to return 50% of any uplift in value from the sale to NHSPS or CHP (as appropriate).

For more information and further advice as to how we can help to support the making of such an application, please contact one of our specialist NHS health property lawyers as set out below.