Make your space work for you!
New GMS premises costs directions signalled long-awaited changes to the funding system for surgery premises in England. Specialist primary care lawyer Danielle Elmy-Liddiard considers key alterations affecting GP practices.
Effective use of surgery premises is increasingly in the spotlight as general practice continues to adapt to changing models of care.
For many GP practices who own or lease their premises it is no longer just a question of considering their own needs for clinical space
but of strategic use to promote collaborative working with others to best serve their patients.
With more remote consultations, integrated teams and multidisciplinary approaches, many practices are looking at opportunities for
sharing or subletting space to complimentary service providers, such as other healthcare professionals, charities, or Trusts.
This shift has prompted a more creative approach to property management. Flexibility and responsiveness are now key considerations
for primary care estates. Subletting part of the practice premises or hiring out space for sessional use has become an attractive option.
Whether to house PCN staff, host community outreach teams or support neighbourhood health initiatives, sharing space can bring clinical and operational benefits. And it can also help offset rising estate costs.
Until recently, practices faced a difficult balancing act. By subletting they risked the permanent loss of NHS rent reimbursement for
the affected areas, even when the space was being used for NHS-aligned purposes.
A new direction for reimbursement
Historically, the premises costs directions which underpin rent reimbursement took a strict approach to subletting. If a room was leased to another party, even if they were delivering NHS services, it was typically excluded from the rent reimbursement calculation.
The logic was that practices should not receive both rent from a subtenant and reimbursement from the NHS for the same space.
This approach potentially discouraged practices from supporting integrated working or hosting additional NHS roles, purely because
doing so could jeopardise their funding. As a result, valuable space could be left unused or informally occupied without any clear
arrangement.
But the 2024 premises costs directions have helped ease this worry because they allow for reimbursement to ‘continue or be reinstated’ when the occupying party is delivering or supporting NHS services. This is as long as the use is properly documented and aligned with
NHS objectives.
Importantly, Direction 5(3)(a) requires practices and commissioners to consider ‘whether any opportunities exist for additional, multi-functional use of the premises.’
This is a significant development because it explicitly recognises that GP premises are no longer single-purpose spaces. The directions encourage use by a wider range of NHS-aligned teams and services, supporting the integration of care.
In practice, this means space can be shared with other complimentary service providers without the automatic loss of rent reimbursement. Under the previous directions, such arrangements could easily have triggered clawback, discouraging collaboration.
Help with costs
GPs can now for the first time seek reimbursement of costs for putting agreements in place with third parties with whom the premises may be shared. Direction 14(3) recognises that shared use often involves additional professional costs – for example, drafting or varying occupation agreements.
It provides that ‘a contractor may claim reimbursement of professional expenses ‘where such expenses are incurred in relation to making premises available for additional NHS services and there is a written agreement with NHS England.’
This provision supports practices in setting up compliant sharing arrangements. The requirement for a written arrangement means that reimbursement is conditional on the arrangement being transparent and aligned with NHS objectives, not simply a commercial letting.
Recognising NHS aligned use
The directions are now more explicit in terms of discouraging double claims and requiring information sharing with the ICB.
Direction 49, for example, addresses contributions from third parties and makes clear this income must be disclosed but, in such
circumstances, allows the ICB some discretion about whether to reduce reimbursement.
It will be interesting to see how this discretion is used in practice but one would expect it would be used sparingly if at all.
Importantly this enables ICBs to take a contextualised view and preserve entitlement where NHS priorities are supported. In short, the
directions do not create a new revenue stream but rather they safeguard existing entitlement where space contributes to NHS objectives.
GP practices should engage early with their ICB to clarify reimbursement eligibility, supply occupancy evidence and confirm any local processes or requirements.
These more pragmatic rules are likely to encourage collaboration between practices and other NHS organisations and help them with the costs of formalising agreements.
While the revised directions offer a more supportive framework, further clarity is still needed on sessional or hybrid use, and how
non-NHS services (private physio or social care partners, for example) will be treated.
Structuring subletting arrangements
Practices should take this opportunity to re-evaluate their premises. A careful review of how each area is used, by whom, and under what arrangements will be essential.
If subletting or sharing has already occurred informally, for instance where occupation is based in the building without a legal agreement, it may now be sensible to regularise the position.
Clear documentation, such as a licence to occupy, can support reimbursement applications and help satisfy ICBs that the space is being
used appropriately.
Practices should review lease or mortgage terms before entering into any agreement. Many leases restrict subletting or require landlord or lender consent, which may affect reimbursement eligibility.
Subletting must still be approached with care. The nature of the occupying party matters. Where the space is used by private providers
offering non-NHS services, reimbursement will remain off the table and the replacement income generated is unlikely to be as reliable.
Similarly, informal arrangements that lack clarity may create risk or confusion about who is responsible for repairs, services or other
liabilities.
A shift from risk to opportunity
In this evolving environment, subletting is no longer a financial compromise, provided it supports NHS aims and is well-structured.
With the right professional support, practices can:
- unlock new funding streams
- strengthen their links with PCNs and ICBs, and
- make more sustainable use of their premises.
The 2024 directions give practices the policy backing to make practical, locally driven decisions about their buildings.
For GP partners and their advisers, this is an opportunity to rethink the role of the premises, not as a fixed overhead, but as a strategic asset that can flex to meet the changing needs of the NHS.
First published in AISMA’s Autumn 2025 edition.