Healthcare Ask the Expert Property Management, Notional Rent Diversity

Ask The Experts - Notional Rent Diversity

Published:22/08/2008

Question

I read ‘Why polyclinics are so costly to run' (GP, 20 June) about the costs of polyclinics compared with regular GP practices and was surprised to see that a suburban four-GP practice in south-east England receives reimbursement of approximately £100,000 a year. We are an eight-GP practice in a rural area in the North West but our notional rent reimbursement is considerably lower. Why?

Answer

The level of notional rent is set by the district valuer (DV) who must look at the market rent of the surgery property on the assumption that various lease terms apply. These notably are that the property is held on a 15-year lease with rent reviews every three years, and that the landlord is responsible for external repair and building insurance, and the tenant for internal repairs.

Market rent will vary because of the size and quality of the premises and the going market rents for similar properties in the area.

So, a four-GP practice in an urban location in south-east England could occupy a 600m2 property and receive rent reimbursement of £100,000 per annum. Conversely, four GPs practising from a converted 200m2 house in the West Country may only receive £15,000 per year in notional rent.

It is easier to look at rates per m2 where rents probably range from circa £70/m2 for older, rural locations outside of the main urban arrears (for example, corners of the West Country) to up to £300m2 for modern, purpose-built medical centres in prime urban locations.

If the spread is narrowed to exclude purpose-built medical centres on prime sites, the range across England for new medical centres probably varies from £150/m2 to £250/m2.