Government holds talks with NHS landlords over pharmacy rents

Maria Caulfield, former pharmacy minister, said the Department of Health and Social Care was working with NHS Property Services to ensure that the valuation approach used in rent reviews is "fair and transparent".
maria caulfield

The government has held discussions with the NHS’s property management arm over its approach to conducting rent reviews for some pharmacies located in health centres, the former pharmacy minister has said.

In answer to a written question on 7 July 2022, Maria Caulfield, then pharmacy minister, said the discussions had been held with NHS Property Services (NHSPS) regarding “specific instances where rent reviews are due at pharmacies located in health centres it operates and owns”.

The response comes after pharmacy representative bodies began voicing concerns over the rising cost of rent for pharmacy owners, with one contractor reporting a 220% rent increase on a premises managed by NHSPS.

NHSPS had previously explained in response to the concern from pharmacy bodies that it values pharmacies located in a healthcare centre “on a rate per patient basis”, while making “adjustments for levels of prescribing and capture rates”.

This falls in line with guidance issued by the Royal Institute of Chartered Surveyors in October 2010, which recommends determining rent costs based on “the likely number of ‘scripts’ (prescriptions) to be issued by the associated GP practice(s)”.

“In part, this is determined by the patient list size of the GPs and by the demographics of the practice list,” the guidance says.

In her written response, Caulfield said that rent reviews conducted by NHSPS use “a standard valuation approach for calculating the proposed level of rental charges to ensure it recovers the costs of operating these premises, which are then negotiated and agreed with the pharmacies concerned on a case-by-case basis”.

She added that the Department of Health and Social Care (DHSC) “is working with NHS Property Services to ensure that the application of this approach is fair and transparent”.

Steve Anderson, group managing director at Phoenix UK, which owns Rowlands pharmacies, said the DHSC’s discussions with NHSPS were “long overdue”.

“As the minister stated, rents need to be ‘fair and transparent’. They also need to reflect that pharmacies provide essential healthcare services to local communities and are now needed more than ever as the country tackles the post-pandemic patient treatment backlog.

“We have a funding crisis in community pharmacy in England and exorbitant rents charged by NHS Property Services simply push more pharmacies to the point where they have little choice but to consider closing, which then results in more pressure on other parts of the NHS and poorer patient outcomes.

On 8 July 2022, Caulfield was replaced in her position as health minister for primary care by James Morris, following a wider government reshuffle.

Last updated
The Pharmaceutical Journal, PJ, July 2022, Vol 309, No 7963;309(7963)::DOI:10.1211/PJ.2022.1.149936

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