Transfer of the PCT Estate and NHS provider organisations
Following the issue of David Flory's letter to SHA and PCT cluster chief executives on 31 May 2012, the PCTs and SHAs have been focusing on the Department of Health's ('DH') requirements and timetable for the property and estates transfers to either NHS providers or NHS Property Services Limited ('NHS PS') to be completed by 31 March 2013 through the Property Transfer Schemes.
Although the current focus is on the PCTs and SHAs to comply with the timetable, it is important that all NHS trusts and foundation trusts in occupation of PCT premises and/or taking a transfer of PCT premises are equally proactive to protect their position and get the best possible outcome in terms of:
- formalising undocumented occupations of PCT owned premises
- minimising title issues and other risks on any property transfers
Formalising undocumented occupations
The guidance issued earlier this year emphasised that PCT properties mainly occupied by NHS bodies and clearly linked to the provision of clinical services will transfer to local provider NHS organisations such as NHS trusts or NHS foundation trusts. The rest of the PCT and SHA estate will transfer to NHS PS on 31 March 2013. PCTs have been directed to formalise their undocumented property arrangements by 31 December 2012. This includes formalising occupation by NHS provider organisations.
Why is there a benefit to NHS providers engaging with PCTs now to document their property arrangements?
- NHS PS will be a self-financing commercial landlord and in light of this is likely to have a more commercial approach to new property arrangements
- NHS PS has a number of commercial objectives including delivering value for money in property services and cost-effective solutions and it is envisaged that it will look to meet those objectives by taking a more rigorous stance on terms such as rents, rent reviews, service charges and dilapidations liabilities than PCTs have previously taken
- as PCTs will wish to meet the deadline of 31 December 2012 they may at this stage be more willing to adopt a reasonable and collaborative approach to the formalisation process and negotiation of the terms of occupation
What should NHS providers do now?
NHS providers should adopt a proactive approach to resolving any undocumented occupations by considering the following:
- obtaining legal advice on the type of occupation that they have and how this could be documented quickly and cost-efficiently
- agreeing a process and strategy for approaching the relevant PCTs to set the ball rolling to agree heads of terms
- decide how much due diligence they wish to undertake on the properties to be transferred - this should involve considering the adequacy of the DH's short form replies to enquiries that the PCTs are required to produce following the DH's guidance for their purposes; whether these sufficiently address issues from a risk analysis perspective; and whether additional enquiries should be raised and any of the 'usual' conveyancing searches carried out
- adopting a collaborative approach with the PCTs to the lease documentation used to formalise the occupation to streamline the process, save time and reduce costs
Property transfers to NHS providers
NHS provider organisations should be aware that the PCTs have to prepare a draft schedule of properties, assets and other liabilities by 14 September 2012 for approval by the DH. These schedules are to be finalised by 15 November 2012 and signed off by DH by 31 December 2012. This means it is 'last chance saloon' for those NHS provider organisations that are interested in taking a transfer of PCT property - they must decide now if they want to take on PCT property and the pros and cons of so doing. If not agreed, the properties will go to NHS PS and the ability to take on those properties on potentially more favourable terms could be lost.
What should NHS providers do now?
- agree the final list of properties to be transferred
- choose the best level of due diligence to protect the NHS provider's position whilst being reasonable and sensible in terms of the context of the transfer
- instruct your lawyers to carry out title reviews to help to assess the appropriate due diligence to undertake and the consideration of the associated risks
How Capsticks can help
Capsticks have the expertise to ensure that your NHS provider organisation can achieve formalisation of any undocumented occupations or the transfer of any PCT properties quickly and efficiently by undertaking the following tasks:
- carrying out an index map search at the Land Registry to determine the legal owner and obtaining copies of the relevant title details
- drafting suggested heads of terms for negotiation with the proposed landlord
- agreeing a strategy to engage with the PCT for either a lease/licence or transfer (as appropriate) and the level of due diligence that you require (e.g. options on the replies to enquiries and level of searches needed)
- where a lease is required to formalise an undocumented occupation we have successfully developed a 'middle ground' form of occupational lease for occupiers which is substantively compliant with The Code for Leasing Business Premises in England and Wales 2007. This Code aims to achieve a reasonable form of lease from both a landlord and tenant perspective to reduce unnecessary time spent and costs incurred by protracted negotiation and to streamline the lease formalisation process for the benefit of all parties. This has been very well received by both PCTs and their NHS provider occupiers
For more information, please contact Lisa Geary or Mark Paget Skelin.