Notional Rent Process and how to Challenge
What is Notional Rent?
Notional Rent is a form of reimbursement for GPs who own their GP Premises and use it for the purpose of providing approved NHS services on either a GMS or PMS basis.
It is reviewed every three years (by the NHS/CCG) and every practice will have their own triennial review cycle which is based on when the practice first opened its doors. The review may be brought forward by the NHS/CCG if, for example, there is a change to the purpose for which the premises are used or if fairly significant physical changes to the surgery are undertaken which will affect the level of Notional Rent the practice receives.
How is Notional Rent Calculated?
In England Notional Rent is calculated by the DV (District Valuer) on behalf of the NHS/CCG. In Wales the Health Board use ‘in-house’ valuers.
The Premises Cost Directions determine the aspects that should be taken into account when considering a GP surgery’s Notional Rent reimbursement and how this should be assessed.
The amount of notional rent to be paid to a practice is based upon the CMR (current market rental) value for the premises that is approved and used for GMS or PMS purposes.
The CMR is assessed based on notional lease terms, which assume a 15-year lease term on tenant’s internal repairing obligations with the landlord responsible for external and structural repairs and building’s insurance.
There are many factors that determine CMR including the agreed Current Market Rents of similar surgery premises in the locality of the subject property, the type of property as well as the age and quality of specification.
What is the Notional Rent Review Process?
The NHS/CCG are responsible for commencing the 3-yearly review of the Notional Rent of a practice. They will instigate this process by issuing the practice with the CMR1 forms (Prem1 forms in Wales). This should be done 2-3 months prior to a review becoming due. However, it is very rarely done on time and often practices can be waiting months to receive their forms.
Once the surgery are in receipt of the forms, it is their responsibility to fill them in to the best of their knowledge and submit them back to the NHS/CCG in order for a District Valuer to be appointed to undertake the Notional Rent assessment.
The District Valuer will then generally arrange for a visit to the premises to inspect and ensure no changes have been made since the previous review. After the District Valuer has been to the practice they will write up their report and issue it to the NHS/CCG for their approval. Please note that following the coronavirus pandemic District Valuers have not been inspecting surgery premises but have been preparing Notional Rent assessments on a “desktop” basis.
Following the NHS/CCG’s approval of the District Valuer’s opinion of rental value they will issue the CMR6 letter (or Notional Rent determination letter) to the practice. The surgery then has the opportunity to get a second opinion (usually from an independent surveyor) to ensure the value is in line with the current market and they aren’t getting underfunded.
How do you challenge the Notional Rent determination?
If a practice is not happy with the outcome of the Notional Rent review or if they want to check to ensure they are receiving the correct reimbursement they can seek a second opinion from an independent surveyor (ideally specialising in primary care properties).
Once instructed, the surveyor will arrange for a visit and inspection of the premises in order to complete their own assessment of the Notional Rental value of the premises.
If the practice’s surveyor is of the opinion that the District Valuer’s Notional Rent assessment can be increased, the practice needs to inform the NHS (in writing) of their intention to appeal the District Valuer’s opinion in order to instigate a challenge to the Notional Rent determination.
The NHS/CCG will then instruct the District Valuer to enter negotiations with the practice’s surveyor and the two parties will discuss and try to agree the appropriate Notional Rent for the surgery premises. Once agreed and approved by the NHS/CCG they will arrange for any backdated rent arrears (to the relevant review date) and amendments to the practice’s payments will be made.