If your practice occupies premises owned by NHS Property Services (NHSPS) or Community Health Partnerships (CHP), you are only obliged to pay a service charge that is reasonable, properly incurred, and reflects services actually provided to your building. You are not obliged to accept a charge simply because NHSPS has applied its Consolidated Charging Policy, and the courts have already confirmed that a blanket policy cannot simply override the terms of your individual occupation.
Disputed service charges have become one of the most persistent property issues facing GP practices in England, and for good reason. Charges can run to tens of thousands of pounds a year, often with limited supporting evidence, and because most service charge costs are not reimbursed through the NHS funding system, any overcharge comes straight out of practice income. This post explains why practices are liable for these charges, what the courts have said, and what steps to take if you believe you are being asked to pay too much.
Why GP Practices Are Liable for Service Charges at All
Where a practice occupies NHSPS or CHP premises, the landlord provides services to the building, such as repairs and maintenance of common areas, cleaning, security, and utilities to shared spaces, and recovers the cost through a service charge. The legal basis for that charge depends on how the practice occupies the premises: under a formal lease or licence, or, where no current written agreement exists, by reference to the conduct of the parties. Uncertainty is most common where an original agreement has technically expired but the practice has continued in occupation, or where no lease was ever properly documented in the first place.
Critically, most of the cost of a service charge is not something an ICB will reimburse. Integrated care boards reimburse GP practices for defined “Reimbursable Sums” under the premises cost reimbursement rules, typically covering rent, rates, and insurance, and in some circumstances a proportion of management fees. The bulk of service charge costs, however, fall into the category of “Non-Reimbursable Sums” and are a direct cost to the practice. This is precisely why disputed charges matter so much financially: unlike rent, an unjustified service charge cannot simply be passed through to NHS funding.
What the Valley View Case Decided
The leading case in this area is Valley View Health Centre (a firm) and others v NHS Property Services Ltd [2022] EWHC 1393 (Ch), a combined trial of five separate actions brought by GP practices against NHSPS, funded by the BMA and heard in the High Court, with judgment handed down on 8 June 2022. The court considered, among other things, whether practices occupying under informal arrangements (including tenancies at will and tenancies implied from conduct) were nonetheless liable to pay service charges, and found that NHSPS was, in principle, entitled to claim service charges from practices, including in some cases where no written agreement was in place.
That is not, however, a green light for NHSPS to charge whatever it likes. The judgment made clear that the five cases were decided on their own specific facts rather than as generally applicable “test cases”, and it highlighted real difficulties with how NHSPS had gone about calculating and evidencing its charges, including applying a blanket charging policy across a building or group of properties without regard to the services actually delivered to a specific practice, and failing to properly evidence the costs it claimed to have incurred. In short, Valley View confirmed that practices can be liable for service charges, but it also confirmed that each practice’s liability has to be assessed on its own facts and evidence, not assumed from a standard policy document.
Common Problems With NHSPS and CHP Service Charges
In practice, disputes tend to cluster around a small number of recurring issues:
- Blanket policy charges. NHSPS’s Consolidated Charging Policy was designed to standardise charges across its estate, but standardisation does not override the actual terms of a practice’s occupation or the services it actually receives.
- Unjustified management fees. A common feature of disputed bills is a flat management charge, sometimes set at around 5% of rent, justified only by generic reference to “work done by NHSPS” rather than any itemised cost.
- Lack of supporting evidence. Practices frequently report being billed for several years of alleged arrears with little or no documentation showing what was actually spent, on what, and why the practice’s apportioned share is fair.
- Unfair apportionment. Where a building is shared with other occupiers, charges need to be split fairly between them. Disputes often arise where a practice is asked to bear a share that does not reflect its actual use of the building.
- Charges under expired or informal arrangements. Where no current lease is in place, both the basis for charging and the rate applied can be genuinely unclear, and need proper legal analysis rather than simply accepting NHSPS’s figure.
Steps to Take if You Are Disputing a Service Charge
- Establish exactly what governs your occupation. Before you can assess whether a charge is fair, you need to know whether you hold a current lease, an expired one, or an informal arrangement, since this affects what NHSPS is entitled to charge and how.
- Request full supporting documentation. Ask NHSPS or CHP to evidence the specific costs incurred for your building and how your share was calculated. Do not accept a headline figure without an itemised breakdown.
- Engage early rather than letting arrears accumulate. The longer a dispute is left unresolved, the larger the sums in question typically become, and the harder it is to reconstruct what was actually delivered years earlier.
- Keep your own records. Maintain a clear log of correspondence, invoices, and any services you believe were not delivered or were delivered to a lower standard than charged for.
- Set money aside pending resolution. If your practice has historically paid little or nothing towards service charges, be aware that a negotiated settlement may still involve some backdated liability, so it is sensible to provision for this in your accounts rather than treating a dispute as a reason to assume nothing will ultimately be payable.
- Consider mediation or negotiation before litigation. Following Valley View, a number of practices have achieved significant reductions in disputed sums through negotiated settlement rather than further litigation, in some reported cases involving discounts of the order of 80% against the amount originally claimed. Litigation remains an option where negotiation fails, but it is rarely the first step given the cost and time involved.
How Disputed Service Charges Connect to Premises Reimbursement
Because most service charge costs sit outside NHS reimbursement, they interact closely with the wider rules on how GP premises costs are funded. Practices querying a service charge often need to look at the same underlying framework that governs rent reimbursement and notional rent, since the two issues frequently surface together during a premises review. Our post on the NHS Premises Costs Directions explains that framework in full, and our post on what the Valley View rulings mean for your practice looks in more detail at the litigation itself and its wider implications for GP tenants.
What This Means for Your Practice
A disputed NHSPS or CHP service charge is a property law issue as much as an NHS contractual one, and getting the basis of your occupation right is usually the starting point for a successful challenge. We advise GP practices across London and the South East on reviewing NHSPS and CHP service charges, challenging unsupported claims, and negotiating settlements. If your practice is facing a disputed service charge, speak to our commercial property team or call us on +44 207 566 1188. You can also reach us by email at info@gurvelegal.com.
