It’s always been important for NHS providers to formalise and regularise their estates arrangements through negotiating leases or (where appropriate) licences, in accordance with best practice guidance as set out in Health Building Note 00-08 (also known as NHS Estatecode). Properly documented leases – whether as landlord or as tenant can:

  • play a key role in quantifying and managing risk arising from the rental and use of the assets;
  • ensure best practice compliance with HBN 00-08 guidance;
  • help to avoid potential for uncertainty or dispute between the landlord and the occupier either during or after the end of the occupancy arrangements; and
  • assist in evidencing CQC compliance requirements for an ‘approved regulated activity’ at the property and for the purposes of Regulation 15 of the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014.

New IFRS 16 requirements for leases

In addition to the above, NHS England and NHS Improvement have now published important guidance on the implementation of accounting standard IFRS 16 which applies to leases:

IFRS 16 (Leases) will apply for NHS bodies from 1st April 2020, however NHS providers will need to estimate the impact of IFRS 16 in advance of this date and will need to identify and then collate required information for all of their leases, even where the occupational arrangements are buried within other documents such as service contracts for example. The information to be collated in the lease register should include (but is not limited to):

  • Remaining lease term;
  • Lease variations;
  • Information on current rents, lease costs and rent reviews;
  • Interest rate inherent in the lease;
  • Other lease terms such as purchase options or termination penalties.

NHSE/ NHSI go on to confirm in the guidance note that this is likely to be substantially more information than was previously held on the lease register.

Under IFRS 16, property leases with a term of more than 12 months will be captured by the lessee on their balance sheet. Determining the lease term is important. Lease term is defined as the non-cancellable period for which a lessee has the right to use an underlying asset, together with both: (i) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (ii) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

IFRS 16 – what does this mean for NHS providers?

It’s now more important than ever for NHS providers to identify, review, formalise and regularise their occupational arrangements, in order to collate the information required for their lease register under IFRS 16. Unregularised arrangements are likely to lead to ongoing uncertainty and the increased risk of inaccurate information being entered on the lease register, such as uncertainty regarding the lease terms for example.

How can Bevan Brittan help?

Our experienced and specialist property team is the largest of its kind nationwide, and we have an unrivalled record in regularising NHS occupational arrangements. We can help NHS providers at all stages throughout the occupational regularisation process, including:

  • Carrying out an estates audit to identify your occupational arrangements, including collating deeds and leases from other parties in addition to checking our own extensive archives;
  • Summarising or checking information required by IFRS 16 for inclusion on your lease register;
  • Negotiating leases and licences to regularise your occupation whether you are the landlord or the tenant, including support in preparing heads of terms where necessary;
  • Using our state-of-the-art shared workspace HighQ to collaborate with you on your occupational regularisation programme;
  • Applying for retrospective consent from landlords and mortgagees where appropriate; and
  • Undertaking IFRS 16-compliant estates due diligence where you are acquiring a new services contract or in advance of business acquisitions.


If you would like to find out more, please contact:

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