NHS Property Services Limited

Not since the wholesale transfer of NHS property assets to NHS trusts in the 1990s has there been such a major re-organisation of the way in which the NHS holds real estate. With effect from 1 April 2013 NHS Property Services Ltd (NHS PS) will be responsible for some 3500 NHS properties valued at around £5.5bn following dissolution of PCTs and SHAs. This will include a wide range of property types and will encompass everything from freeholds to short term leases.

NHS PS was set up almost a year ago but delays in passing the Health and Social Care Act 2012 meant that it was not until this summer that it began to take shape as what will be an important new component in the NHS structure.

With its own structure in place and senior appointments made the push is now on to ensure a smooth transition for properties passing to NHS PS. Schedules of properties have now been agreed and a title and information gathering exercise phase has been concluded. Over the coming months NHS PS's lawyers will be looking at the title detail and management information for each property to ensure that when NHS PS takes control on 1 April 2013 it can do so seamlessly.

Fewer properties than originally anticipated will be transferring to provider organisations. Controls on use clawbacks and options to reacquire that the Department of Health sought to impose on such transfers greatly reduced their attractiveness and when the right to bid for properties was restricted to those which were clinically critical it became apparent that there was not going to be much benefit for providers in taking properties over.

It remains uncertain what NHS PS will be like as a landlord. There has been some scaremongering particularly amongst GP tenants that there will be an agenda to drive up rentals. Whilst rent reimbursement under the 2004 Directions remains in place this should not be too much of a concern but NHS PS may look more closely at service charge arrangements and performance of any tenant repairing obligations than perhaps PCTs ever did.

Inevitably there will be talk of backlog maintenance costs and funding gaps that have to be dealt with and no doubt there will be historic rentals that need to be looked at. However NHS PS has recently declared that it is keen to ensure there is stability in property costs transparency for occupiers and agreement in how it utilises the NHS estate and properties in the most effective way. Of course effectiveness for NHS PS may mean something different for its tenants.

Whereas having a PCT commissioner as a landlord had its problems (the imperative to ensure the provision of services often weakened the hand of the PCT as landlord) it is not clear what effect this separation of roles will have in the future. As a part of the NHS it might be expected that service delivery will be foremost amongst NHS PS's priorities. But at the same time NHS PS is outside the NHS as a private limited company that will be under pressure to show a trading surplus and will not be cross-subsidising service provision through below market rents. More significant will be whether NHS PS will feel less restrained in taking action against defaulting tenants.

The flip side to this is that as an organisation it may be less able to defend any shortcomings as a landlord by referring to other priorities it will be unaffected by the balancing of resources that faced PCTs which sometimes resulted in property maintenance being neglected in the face of competing financial pressures.

Some comfort can perhaps be drawn from the fact that some 3000 existing estates staff will be transferring to NHS PS giving a strong measure of continuity in terms of those who will be providing property services. How this workforce is deployed is unlikely to change in the immediate future but NHS PS will be looking for savings from economies of scale and will undoubtedly be looking at new ways of managing the estate.''

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