Valley View v NHS Property Services Ltd [2022] EWHC 1393 confirmed that GP practices can be liable to pay service charges to NHS Property Services Ltd (NHSPS) even where there is no written lease, and that liability depends on the specific facts of each practice’s occupation rather than on a single, general rule. The five-case judgment, handed down by Edwin Johnson J in June 2022, remains the leading authority on this issue and practices are still dealing with its consequences.
If your practice occupies NHS-owned premises and has ever queried a service charge demand from NHSPS, or is unsure whether you are even contractually liable to pay one, Valley View is the starting point for understanding your legal position.
Background: how GP practices ended up disputing service charges at all
Before April 2013, most GP surgery premises were owned by Primary Care Trusts (PCTs), which acted as both the NHS commissioner of primary care services and the GPs’ landlord. Rent and many service charges were reimbursed to GPs through that commissioning relationship, and PCTs frequently did not pursue the full non-reimbursable service charge from practices in any event.
In April 2013, as part of the wider NHS reorganisation, around 3,700 of these properties transferred to NHS Property Services Ltd under statutory vesting schemes, separating the landlord role from the commissioner role for the first time. GPs continued to receive funding for rent and certain reimbursable costs, but were now required to pay NHSPS directly, in full, for the landlord’s other costs of providing services to the building. Many practices had occupied their premises for years, sometimes decades, without a formal written lease ever having been completed, which left the legal basis for any service charge liability genuinely unclear.
From 2015, NHSPS began publishing annual Charging Policies asserting that GP tenants without a written lease were still liable to pay service charges. Disputes escalated, supported by the British Medical Association, and five GP practices ultimately brought proceedings seeking declarations that these policies had not altered the terms of their occupation. NHSPS counterclaimed for declarations as to its own service obligations and for the practices’ outstanding arrears.
What the five test cases actually decided
The judgment runs to around 170 pages and covers a wide range of landlord and tenant issues, but three findings matter most for GP practices generally.
Occupation without a lease can still be a tenancy at will, not a free pass
In the Valley View and St Andrews cases, the court had to decide whether the practices occupied as tenants at will or under a tenancy implied from conduct (which, if protected under the Landlord and Tenant Act 1954, carries different and generally more tenant-favourable consequences). Applying established authority on tenancies at will, the judge held that the Valley View claimants, despite 14 years in occupation and long gaps in negotiations for a formal lease, remained tenants at will throughout, because the parties’ shared intention had always been that a formal grant would eventually follow. Occupying premises for a long time without a lease does not, by itself, create a stronger tenancy.
Where a tenancy is implied from conduct, service charges are still generally payable
In the Coleford and St Keverne cases, where it was accepted the practices held tenancies implied from conduct, the court held that the terms the parties should be taken to have intended included an obligation to pay “the landlord’s reasonable costs of services reasonably provided”, including internal management fees, even though management fees had not historically been charged before 2013. The practices’ arguments that their liability was capped, or that they held on an “all-inclusive rent” basis excluding separate service charges, were both rejected on the facts.
Management fees can be recovered as part of the service charge
NHSPS sought to recover its own internal management costs as part of the service charge in all five cases. The judge held there is nothing inherently objectionable in a landlord recovering internal management costs, provided the lease or implied tenancy terms are wide enough to cover them and the costs are not too distant from the services they relate to. In the written lease cases, broadly drafted service charge covenants were held wide enough to include management fees.
What Valley View means if your practice does not have a written lease
| Your situation | What Valley View established |
|---|---|
| No written lease, long occupation, ongoing lease negotiations with gaps | You are likely a tenant at will, not a protected tenant, regardless of how long you have occupied |
| No written lease, services provided and part-paid for over time | A tenancy implied from conduct may exist, carrying an obligation to pay reasonable service charges including management fees |
| Written lease with a broad service charge covenant | Management fees are likely recoverable if the covenant is wide enough to cover them |
| Disputing historic charges based on the pre-2019 Charging Policy position | NHSPS conceded in 2019 that the Charging Policies did not themselves alter tenancy terms, and the court declined to make further declarations on this point as no live dispute remained |
Challenging a service charge demand
Valley View did not hand NHSPS a blank cheque. The judgment turned heavily on the specific facts of each practice’s occupation history and the actual wording of any lease or the terms that could properly be implied from conduct, and NHSPS was expressly found in some of the linked proceedings to have failed to prove that certain costs had actually been incurred for a specific practice. If you are disputing a service charge demand, the practical starting points are establishing exactly what your occupation status is (tenancy at will, implied tenancy, or written lease), what the relevant lease or implied terms actually say about recoverable costs, and whether NHSPS can properly evidence that the costs claimed were genuinely incurred for your premises. We cover the practical steps for disputing a demand in detail in our article on NHS Property Services disputed service charges.
Where a service charge dispute becomes entangled with a wider disagreement among the partners, for example over how a disputed liability should be funded or allocated, the position can escalate quickly. Our guide to resolving a GP partnership dispute sets out the options available if that happens.
What This Means for Your Practice
If your practice occupies NHS-owned premises without a clear written lease, do not assume either that you owe nothing because nothing was ever formally agreed, or that you owe whatever NHSPS invoices because a court has already ruled against practices generally. Valley View means your specific occupation history and the actual services provided need to be established before any charge is accepted or challenged.
If this affects your practice and you would like to talk it through, get in touch with our healthcare team or our dispute resolution specialists, call us on +44 207 566 1188, or email info@gurvelegal.com.
