DIRECTION ISSUE CHANGE RATIONALE PART 1. Wording added: These Directions are given to the Local Health Boards. some definitions:

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1 GP Premises- Revised Directions Detailed amendments and stated rationale DIRECTION ISSUE CHANGE RATIONALE PART 1 General 1 Citation, Commencement and application 2 Interpretation Additional Definitions Wording added: These Directions are given to the Local Health Boards Additional definitions and expansion of some definitions: Meaning of spouse expanded Deleted : Statement of Fees and Allowances and Financial entitlements as no longer relevant. Added definition for: Appointed Valuer At the outset we wanted to make it clear that the Directions are for the LHBs to apply. This was previously covered in Direction 3 but it was felt should be highlighted at the outset. Additional definition added to provide clarity around the professional who can advise and be appointed by an LHB in terms of performing services under the directions. 3(c) Payments in relation to which the directions apply Additional provision to cover remortgage by the contractor (c) relating to the relocation of or remortgage by, the contractor 4(b) Direction removed Reference to Section 19 of the Statement of Financial Entitlements removed. Additional provision to cover GP contractor remortgaging from a high interest to lower interest mortgage resulting in savings. This is to allow LHBs the flexibility to support a GP contractor should a more attractive loan arrangement be available which could result in savings in terms of reimbursement. This no longer applies and has been deleted. 6 (d) Reference to NHS Wales Act changed Change from 1977 Act to 2006 Act Change to reflect existing contractual arrangements. PART 2 Premises Development and Improvement 7 Premises development and improvement proposals Title changed to reflect issues covered under this part including development and improvement proposals Additional proposals to be covered Sale and Lease Back Specific reference now made to sale and lease back. Please see requirements under Direction 33 (2). The amount of financial assistance should 1

2 including: (d) utilising previously unused space; and (e) sale and lease back of premises Additional wording including that a LHB must not agree to fund a proposal where contract for works have been entered into, or work commenced, that has not been subject to agreement of the LHB. not be more than the amount paid through notional rent immediately prior to the sale and lease back. The Direction has been specifically included so that any practice is aware that the notional rent is the base line up front when entering into a discussion with a potential landlord. The GP will need to raise this with Landlords as should they seek to elect to charge VAT there is no additional funding on top of the notional rent figure in these circumstances. 8 Projects that may be funded with premises improvement grants Some additional provisions added to This was discussed with GPC (Wales) and it was pointed out that the GP would be in full knowledge of the notional rent threshold and the NHS would not be seeking to pay more than this. A sale and lease back is something the GP contractor choses to do and is not an investment decision led by the LHB. A GP contractor would therefore need to understand the consequences of proceeding down this route. Commencement of Works The requirement to seek agreement of the LHB prior to contracting or commencing works was previously included in WHC 2006 (032) (now revoked) and referenced in Direction 9 (a) previously under improvement grants. The revised directions now make it clear that Contractors should submit any proposal to LHB who will take a strategic view on whether it should be supported. Any works undertaken by the contractor without approval will not be reimbursed. Reference to Disability Discrimination Act changed to Equality Act

3 cover emergency planning, infection control and installation of water meters. Additional items included dealing with issues which assist in terms of managing unseen events, infection control issues and in the case of water meters (encouraging more thought and consideration around water use) 9 Projects that may not be funded with an improvement grant (d) the repair and maintenance of premises (including work made necessary as a result of wear and tear). (g) like for like replacement and repair of existing central heating systems including the replacement or repair of boilers (j) improvements solely to reduce the environmental impact of the practice premises (k)projects with a total cost of less than 3,000 A schedule is being developed to assist LHBs in terms of eligible and non-eligible woks. This will be circulated shortly. We have given clarity around what may not be funded. Please note the additional issues picked up. It is considered that grants should be focused on improvements which deliver clinical and service delivery improvements. In term of wear and tear, GP contractors should be responsible for this as would any other business or property owner. Boiler replacement and repairs are not to be funded. There are certain circumstances where there is an improvement/extension to a system as a result of an extension that can be considered. However, normal repair and end of life replacement is not. The reason for excluding improvements designed to reduce environmental impact e.g. solar energy systems etc. is that separate grants and financial payback mechanisms are in place for these. It would not be appropriate for additional funding to be available when there is a financial payback for the GPs as independent contractors. A threshold has also been introduced so that only projects which exceed 3,000 may be considered. The value of this threshold has been debated and 3

4 a view was taken that small improvement works that have a total overall cost of less than 3,000 should be regarded as GP contractor responsibility. 10 Initial consideration of premises development and improvement proposals 12 Priority funding projects and conditions attached to payments There are a number of amendments to this section specifically with reference to how LHBs determine a proposal and what they must do including: Ensure contractor has used LHBs required forms and includes supporting documentation; Consider utilistation of the premises and explore opportunities for full utilistation; Enquire of VAT status; Enquire of intentions in terms of tax refund and allowances; Have regard to budgetary targets Seek professional advice; Specific reference to DV has been removed (reference to professional advisor left in); Reference is now specifically made to documentation that is applicable to Wales The LHB may agree a contribution, which must not be less than 33% and not more than 66% of the total cost of the premises improvement. 12 (3) (b) (iii) change to timeline that premises is to remain in use for delivery of NHS services depending on the cost now 6, 9 and 15 years with an additional cost tier included: LHBs need to ensure that investment proposals meet their requirements in terms of satisfying the priorities set out in their estates strategy. The purpose of the revised directions is to ensure that LHBs are given more clarity in terms of what they need to consider when assessing proposals, including: Their priorities; Looking at utilisation of practice premises; Budgetary targets; Contractor status in terms of business including VAT; Specific guidance now published/due to be published in Wales. Slight rewording to provide clarity around the meaning of this provision. The LHB makes a contribution towards (it does not pay for all the improvement works) this can be a % as long as not less than 33% and not more than 66% of the total cost of the works. Period of guaranteed use for projects costing over 250,000 included at 15 years. Other parts of this direction also amended to reflect the three tiers 6, 4

5 PART 3 Professional Fees and Related Costs 14 Types of professional expenses that may be reimbursed PART 4 Grants relating to relocation of, or remortgage by a contractor (iii) (c) for projects costing over 250,000 plus Value Added Tax of at least 15 years. (iv) and (v) amended to reflect the 6, 9 and 15 year period of guaranteed use. 14 (1) (a) professional expenses for notional rent cases added in which will be reflected in the notional rent calculation are (i) reasonable surveyors, engineers and architects fees up to a maximum reimbursable amount of 12% of the total reasonable contract sum relating to the construction and or refurbishment work; and (ii) reasonable legal costs. 14 (1) (b) for leasehold premises (i) reasonable costs of engaging a monitoring surveyor up to 1% of the total reasonable contract sum; and (ii) reasonable legal costs. 9 and 15 years (it was agreed that we would adjust the timeline to link with triennial review cycle) (a) Notional Rent Costs - Amended to give clarity to the contractor that the approach to expenses in notional rent cases is for the professional adviser to reflect the costs as part of the notional rent calculation. Otherwise this could lead to double counting. (b) Leasehold Premises Costs - Amended to reflect practical application of fees which has been used for leasehold premises. Approach to fees is different to notional rent as rent in leasehold premises is payable to the landlord. The LHB agrees a contribution towards monitoring and legal costs to the contractor. (b) (i) reference to project manager changed to monitoring surveyor as the GP contractor will have a monitoring surveyor advising them and protecting their interests. For Leasehold premises there has been a rule of thumb used 10,000 per project for monitoring surveyors and 5,000 per practice for legal costs. We attempted to set these thresholds out in the Directions but it was felt this would restrict any flexibility around agreeing different figures. What is key is that the LHB satisfies itself that any contribution is reasonable, has evidence of this and is then able to agree a contribution based on the information available. 5

6 Part 4 Repayment mortgages redemption/deficit grants Whole Part 4 has been amended to reference repayment mortgages Wording added to clarify that grants under Part 4 can only be considered if a contractor has a repayment mortgage. Interest only mortgages will not be considered. This has been implemented in practice, but the Directions now amended to reflect this. This has been debated at length. A GP contractor can chose to enter into what ever mortgage arrangement it likes, the issue is if they receive full reimbursement this is based on them paying capital off their mortgage not interest only. A grant is not payable if an interest only mortgage has been paid. 16 Repayment mortgage redemption / deficit grants (1) estates strategy deleted reworded to prioritised programme for investment (1) Where a contractor re-mortgages practice premises and (a) the contractor is in receipt of financial assistance under direction 35 in respect of those premises; (b) the existing mortgage is a repayment mortgage at a fixed rate of interest; (c) the new mortgage is a repayment mortgage at a lower rate of interest than the existing mortgage, and for no more than the amount outstanding under the existing mortgage; (d) the contractor makes an application in writing to the Board for a mortgage redemption grant to cover all or a proportion of mortgage redemption fees that the contractor may incur as a result of the re-mortgage; and (1) slight rewording to link to prioritised programme for investment so aligned with planning regime. (2) This highlights that a grant may also be paid by the LHB where a contractor re-mortgages from a high interest to a lower interest loan. There may still be contractors who continue to have a high fixed rate mortgage on their premises. This change to the Directions provides the LHB with an opportunity to provide a grant to encourage contractors from that high fixed rate mortgage to a lower interest rate arrangement, subject to savings being achieved. An LHB would only consider this type of grant if savings can be achieved. In some cases the redemption penalty may be so high that a refinancing arrangement may not be the best value for money. 6

7 (e) the contractor includes in that application all reasonable information required of it by the Board to determine the application, including details of the existing mortgage and the new mortgage, the LHB must consider that application for financial assistance and in appropriate cases, (having regard, amongst other matters, to the budgetary targets it has set itself, and to the likely savings to be made in the level of financial assistance given under direction 35 as a result of the remortgage), grant that application. 17 Costs that may not be funded with repayment mortgage redemption/deficit grants Additional wording 17 (a) (i) arrangements entered into by the contractor which result in mortgage repayments not being made for a period of time ( payment holidays ) Additional wording as there could be a range of arrangements entered into which lead to a non payment for a period. 18 Matters that must be considered before determining repayment mortgage redemption/deficit grant application Wording deleted and the LHB must deduct from any amount it would otherwise be prepared to pay by way of mortgage/deficit grant the surrender value of any endowment policy cover linked to the mortgage on the premises. 19 Conditions attached to repayment mortgage redemption or deficit grants Former 19 (d) deleted as per 18 above the contractor must provide the LHB with the information it needs from the lender or determine whether any endowment policy cover is linked to the mortgage on the premises, and if so, its surrender value. As this whole part and this section now relates to repayment mortgages only and interest only mortgages fall outside and cannot be considered this wording is no longer of relevance. As per above, no longer relevant as Part 4 only applies to repayment mortgages. Deleted from Direction 22 as well. 7

8 20 Borrowing Costs relating to repayment mortgage redemption or deficit costs 23 Conditions attached to payments under direction 20 (Borrowing Costs) 25 Agreement of guaranteed minimum sale price As per Direction 16 additional provision added to cover where a contractor remortgages from a high interest to a lower interest loan. Wording deleted former 23 (c) the contractor must provide the LHB with the information it needs from the lender to determine whether any endowment policy cover is linked to the mortgage on the premises, and if so, its surrender value; (a) seek professional advice on the achievable sale price of the premises to be sold. (b) only agree to a GMSP where professional advice has been received and having taken into account options for change of use of the premises. As per Direction 16 above As per 19 above no longer relevant as Part 4 only applies to repayment mortgages. Word change as the professional advice will relate to the achievable price prior to sale not actual price. 26 & 27 Grants relating to the cost of reconverting former residential property Circumstances where residential property reconversion grants are not payable 28 Grants towards the cost of surrendering or assigning leases or to meet vacant leasehold premises costs and conditions to be attached Directions 26 & 27 retained. (b) Vacant leasehold premises costs, for the 12 month period immediately following the contractor s vacation of the premises. Additional provision This Direction has not been supported to date in Wales and due to the restricted nature of the circumstances detailed we are doubtful it will be implemented. This grant is only available if the premises are to be rented out to a Registered Social Landlord (RSL). The LHB has to determine the term of rental and also has to consider its budgetary targets available. Defined period during which vacant leasehold premises costs can be considered. The previous open ended period was not regarded as reasonable. Additional wording (condition) included to ensure 8

9 29 Circumstances where loans under 28 must be refused and ensure that payment of the grant is made subject to the condition that the contractor must continue to take all steps to surrender or assign the lease to a third party on reasonable terms. Former 29 (b) the leasehold premises are owns by or leased from an NHS body. Deleted. that contractor has taken reasonable steps to surrender and assign on reasonable terms. This provision has been deleted. In the event of circumstances being encountered where a lease from an NHS body was to be surrendered or assigned then the LHB would need to look at specific circumstances at the time and consider whether Direction 6 applies. PART 5 Recurring premises costs 31 Leasehold premises rental costs Deleted wording varied on or after 1 st April 2004 (b) the LHB is satisfied (before the lease is agreed or varied), where appropriate in consultation with the appointed valuer or its professional advisors, that (i) the terms on which the new or varied lease is to take effect represent value for money; and (ii) the terms on which the new or varied lease is to take effect do not place obligations upon the contractor to maintain or repair the external structure of the premises. Date no longer of relevance Reference to any lease being entered into being value for money, but also linking to the model lease in terms of not placing obligations on the contractor in terms of the external structure of the building. The LHB needs to ensure that any lease entered into by a GP contractor meets these requirements. Advice should be taken from the LHBs appointed valuer or professional advisor. 32 Amount of leasehold premises rental costs payable 31 (1) (a) additional wording to cover VAT added: Subject to (a) the current market rent for the Additional wording to cover VAT under this direction. Direction 31 (2) has been introduced to reflect 9

10 premises, plus any Value Added Tax payable by the contractor if this is properly charged to the contractor by the landlord (but excluding any Value Added Tax in respect of which the contractor can claim a refund); or local resolution. In the event of the local resolution procedure being used and a third party is agreed by both parties to determine the CMR. The figure determined then becomes the amount reimbursed and replaces the figure reported in 32 (1) (b) the actual lease rent for the premises, plus any Value Added Tax payable by the contractor if this is properly charged to the contractor by the landlord (but excluding any Value Added Tax in respect of which the contractor can claim a refund). Whichever is the lower amount (2) In circumstances where the local resolution procedure is applied and a third party, who is agreed by all parties, is engaged to determine the current market rent for contractor s premises, the current market rent is determined by that third party. 33 Current market rents (1) Reference to providing a grant of 20% of the normally approved level of rent reimbursement subject to the District Valuer s assessment has been deleted. New wording - LHBs may in such circumstances, having taken advice from its professional advisors, increase the amount it would otherwise pay as the current market rent of the practice 20% grant removed as Direction 33 has never been enforced as a grant but as a flexibility for the valuer in reporting a supplement rent to support development. New wording changes reference from grant to supplement to the CMR (this is what happens in practice). Direction 7 now facilitates a contractor putting a proposal forward to its LHB to consider a sale and 10

11 premises by adding a supplement so that it does provide both a sufficient return to support new capital investment and sufficient support for the existing premises that meet the minimum standards. Sale and leaseback arrangements (2) sets out the amount payable the lower of CMR, actual lease rent or the amount paid by the LHB in respect of notional rent for the practice premises immediately prior to the sale and lease back. 34 Premiums affecting the lower rent rate Additional wording (2) In considering the actual lease rent in paragraph (1) the LHB should not include any element of that rent which would not be included in the assessment of current market rent, and must not include any properly chargeable VAT for which the contractor can claim a refund. lease back. Direction 33 (2) details the effect of this arrangement on premises rental costs. It makes it clear that the amount reimbursed should not be more that what the notional rent payment is immediately prior to the sale. It will be the GP contractor s decision whether they chose to enter into a sale and lease back arrangement with a third party. This should not mean that this transaction results in additional costs to the NHS in terms of reimbursement either through additional rent or VAT commitment. As such this Direction is clear that the basis of rent should not be more than the notional rent payment immediately before the transaction. Additional wording to clarify the position with VAT in the event of a refund being claimed. Former 35 Equipment etc lease costs for modern practice leasehold premises. 36 Conditions to be met if applications for financial assistance in respect of borrowing costs are to be granted Direction deleted. 36 (b) deleted words equip the premises. (c) additional words added - the loan (being any loan actually taken out by the contractor is secured by the contractor and is for term no more than 20 years. Financial assistance towards leasing equipment, furniture or furnishings has not been supported in Wales. As such this specific direction has been deleted. (b) Wording and equip deleted as the cost elements relate to building and fitting out. Equipment which is loose or not fixed to the premises would not be covered. (c) term of loan included 20 years to provide consistency with model lease used in third party 11

12 development premises. This will require the LHB when considering applications to check the loan period secured for the premises where financial assistance is being sought. 37 The prescribed percentage and aggregated cost element 39 Condition attached to payments in respect of borrowing costs based on a fixed interest rate loan 40 Notional Rent Payments Additional wording: The prescribed percentage has been retained as per the 2004 version. Additional wording added at (2) If a contractor is to receive payments in respect of borrowing costs under this Part the LHB must ensure that the making of the payments is subject to a condition to the effect that the contractor must advise the LHB when the loan has been repaid. (i) has repaid the loans secured on its practice premises or otherwise owns those premises without the benefit of public funding. There was some debate during the negotiations as to a more up to date rate to be used. However, at this point in time no suitable alternative could be agreed. This may be an issue revisited in the future Additional wording included to assist in monitoring the transfer of reimbursement from borrowing costs to notional rent, once the loan has been repaid. Additional wording to clarify that premises is owned by the GP contractor 41 Amount of notional rent payments (ii) there is further capital investment in the premises, which has been agreed by the LHB, and the payments made to the contractor in respect of that investment under its GMS contract. Additional wording to tie in with approval process in that any capital investment would need to be agreed by the LHB if there is to be an impact on any payment made under the contract. 42 Abatement of notional rent payments (1) (a) capital has contributed. (b) reference to contribution after 18 th September 2003 deleted. Changed to the capital contribution was not borrowed or (1) (a) Reference to NHS capital only deleted as funding can be sought from a variety of sources. What is key is that the capital was not borrowed or provided by the contractor. 12

13 otherwise provided by the contractor. (2) The abatement period in paragraph (1) is, where the cost of the building or refurbishment work is (f) up to 100,000 plus Value Added Tax, a period of 6 years; (g) between 100,000 and 250,000 plus Value Added Tax, a period of 9 years; (h) more than 250,000 plus Value Added Tax, a period of 15 years. (b) reference to 18 th Sept 2003 removed. (2) This re-categorises the levels of capital towards improvement costs which are not personally funded by the contractor and sets new increased timescales for which notional rental abatement should apply. 43 Notional rent supplement Added supplement (c) is an owner-occupier of its practice premises and the current market rent (and so the notional rent) for the practice premises I slower than the borrowing cost payment received pursuant to direction 38 immediately prior to the loan being repaid. 44 Amount of notional rent supplements Additional wording: Where a LHB grants an application of the type mentioned in direction 43(c), the amount they must pay to a contractor is the difference between the current market rent (and so the notional rent) and the amount paid pursuant to direction 38 immediately prior to the loan being repaid. The protection mechanism was agreed as part of the negotiations. Please see detail in Direction 44 amendment below. The purpose of this supplement it to protect the GP contractor when moving from borrowing cost to notional rent. The GP Contractor will if necessary be initially provided a supplement until such time as the CMR overtakes the amount which was payable when previously on borrowing costs. It is accepted that there may be exceptional cases where the CMR will never reach the supplemented figure. However, the main intention is that this should not cost an LHB more money, but provide some certainty when moving from one reimbursement regime to another until the CMR catches up. 13

14 45 Payment in respect of running costs Previously Direction 46 now Direction 45 Former 47 Financial Assistance towards Service Charges 46 Abatements in respect of contributions towards recurrent premises costs from third parties Two main changes under this Direction 45 (b) (iii) trade waste added Previous section (iv) in respect of utilities and services linked to modern practice premises deleted (fuel and electricity charges, building insurance costs, cost of internal and external repairs and plant, buildings and ground maintenance costs). Direction deleted Former Direction redrafted: (1) Where any part of a contractor s practice premises is used exclusively on a full time basis by a third party who is not a provider of primary care services under Parts 4 to 7 of the 2006 Act, the LHB must exclude that part of the premises from its calculation of any payment to be made to the contractor pursuant to this Part. The issue of Trade Waste was debated and negotiated at length. The main issue was not to destabilise direct practice income by removal of this payment. It has been agreed that the Directions are amended to reflect trade waste from 30 th June There are no transitional provisions in respect of trade waste as the 2004 Directions did not refer to them. In terms of utility and other costs referred to in (46 (b) (iv) previously any costs linked to utilities or services not reflected in the rent which are tenant requirements are not supported in terms of reimbursement. These are not refundable costs and as such should not be included in the directions. As a result reference has been deleted. It has not been policy within Wales to support services charges. As such this Direction has been deleted. The changes provide reasonable increased abatement periods which align third party arrangements entered into by a contractor in respect of its premises. This allows the LHB to adjust reimbursement in the event of exclusive, part or shared use of premises for non GMS or commercial purposes. (2) Where any part of a contractor s practice premises are used exclusively on a part time basis by a third party who is not a provider of primary care services under Parts 4 to 7 of the 2006 Act, the LHB must reduce that amount of any payment to be 14

15 made to the contractor pursuant to this Part, by a proportionate amount. Former Directions 49 & 50 Abatements in respect of income from private patients and commercial contracts Private income percentages (3) Where during any period, any part of the contractor s premises, including common reception or waiting areas, is shared with a third party who is not a provider of primary care services under Parts 4 to 7 of the 2006 Act or is used by the contractor for commercial purposes other than under the GMS contract, the LHB must, in respect of that period, reduce the amount of any payment that it makes to a contractor pursuant to this Part by a proportionate amount. Former Directions, 49 & 50 deleted New direction 46 amended to reflect occupational arrangements, rather than reliance on declaration of fixed income % s. 48 Minimum standards conditions attached to payments (c) if a remedial notice is served, the notice period must be no more than 3 months. However, there may be rare occasions when a LHB recognises that the requisite remedial work will take longer than three months to complete and in such circumstances the LHB may agree a longer notice period. This Direction provides a direct link between the minimum standards and the requirements of the contract. It provides clarification on whether remedial notices should or should not be served by the LHB and the maximum notice period for which remedial notices should be served, unless the LHB deems a longer period is appropriate. Previous provisions Notice period changed from 6 months to 3 months, in recognition that if the LHB has taken steps to issue a notice steps taken to rectify the issues identified need to be undertaken quickly. Supplementary provisions Deleted previous directions No longer relevant 51 Time limit for making applications LHB s must only consider or grant an Need to clarify cut off for GP contractors in terms 15

16 application made under these Directions if the application is made within 2 years of the premises costs to which the application relates arising. of applications for grants under the Directions. 2 years is a reasonable period within which a contractor should be able to provide necessary information linked to any application. Previous 59 Applications in respect of historic premises costs PART 7 Transitional and Revocation Provisions 53 Transitional Provision in respect of payments 54 Revocation Reference to historic costs on or after 1 st April 2004 Where a contractor made an application for financial assistance under the 2004 Directions before [30 June 2015) but the application has not been determined by the LHB (a) where costs, or any part of them, to which the application relates were incurred before [30 June 2015], the LHB must determine the application and make any payments as if the 2004 Directions, as in force immediately before [30 th June 2015] continue to apply; (b) where the costs to which the application relates were all incurred on or after [30 June 2015] the LHB must determine that application and make any payments in accordance with these directions. Subject to the preceding directions in this Part, the 2004 Directions are revoked. No long relevant. These provide transitional arrangements for agreements made by LHBs under the Premises Directions 2004 to be effected on or after the date of these new Directions Confirms arrangements to revoke existing Directions. Schedule 1 Schedule 1 Minimum Standards Minimum Standard are now split into two The purpose of splitting the minimum standards is to highlight to LHBs that there are statutory 16

17 parts, Statutory Requirements General Minimum Standards standards which the GP practice as a business will be required to comply. A generic statement is therefore made in terms of a contractor taking responsibility and familiarising themselves with current and relevant statutory requirements. It was not possible to provide a definitive list. The general standards accord more with the standards in the previous directions and are more operational requirements which the GP contractor should maintain to ensure the premises are suitable for the delivery of services. Specific reference is made to decontamination and infection control including the safe management of healthcare waste. Schedule 2 Schedule 2 Part 1 Factors Common to All Current Market Rent Calculations 3. Additional provisions (d) where the practice premise has its own car parking facility, the number of car parking spaces which are to be taken into account for the purpose of assessing the current market rent will be the number determined by the LHB on the basis of a visual inspection by, and the advice of its professional advisors. (e) where improvements have been made to the practice accommodation and those improvements are designed solely to reduce the environmental impact of the premises, those improvements must be disregarded for the purposes of assessing the current 3 (d) allows car parking spaces to be reflected in the current market rent but no more than that the LHB subject to advice considers reasonable and specific to the needs of the individual practice. (e) improvements linked to environmental impact will already have either grant or tariff arrangements where the practice will benefit through income or reduced costs these are not to be reflected as it would result in double counting. 17

18 market rent. Part 2 Factors which only apply in relation to Leasehold Premises 4(b) (iii) any Value Added Tax paid by the tenant where properly charges to the tenant by the landlord (but excluding any part of the Value Added Tax for which the contractor can claim a refund) and approved by the LHB prior to payment by the tenant New (c) (ii) review its assessment of the current market rent for the property when the terms and conditions of the lease are varied, even if the variation does not result in any change to the level of the rent charged, or at the end of the lease term (whether or not a Section 25 or Section 26 notice is served) b(iii) To reflect VAT recovery position. c(ii) A variation to a lease could impact on the level of CMR reimbursed and it is due diligence for the LHB to undertake this review. Also at lease end, in the event of the GPs holding over, the LHB will need to consider whether the CMR should be changed. Part 3 Factors which only apply in relation to notional rent cases 5 (a) wording changed from is to be for a term of 15 years, with upward only rent reviews every three years; to New wording: (i) a new lease for a term of 15 years, with rent reviews every 3 years when the rent may rise or fall; and (ii) is reflective of market conditions at the review date. (g) allows the premises to be used for (a) The wording in the 2004 directions has always lead to confusion around the meaning of the notional lease. The new wording clarifies the meaning here. The professional advisor assumes a new lease at each triennial review and assumes that lease has reviews which reflect market conditions at the review date. Thus movement of the notional rent can go up and down. (g) reference to other alternative uses deleted. The reimbursement regime is to reflect the GPs use of the premises for practice premises not to reflect alternative uses. This is a hypothetical lease arrangement created to provide for reimbursement. 18

19 practice premises only words deleted and for any other purpose for which planning permission has been granted, or might reasonably be expected) 19