Doctors are permitted to buy buildings for their surgeries which are then “rented” back to the Department of Health, often for far more than the mortgage repayments. The surgery is then sold off – either to another doctor or a developer – when the GP retires and they are allowed to keep the profits from the sale of the building.
An investigation by this newspaper and the Bureau of Investigative Journalism has uncovered details of the secretive scheme, which currently costs the Government more than £630m each year.
GPs have boasted that they have made six or even seven figure windfalls from the system – the costs of which have soared by more than 70 percent in just six years.
The terms of the arrangement are even more generous than the controversial system which allowed MPs to profit from the sale of taxpayer-funded properties.
A typical surgery may have been bought for £150,000 a decade ago. The GP then could then claim tens of thousands of pounds in “notional rent” annually which is used to clear the mortgage. They could then sell the property today for more than £500,000, and often substantially more, and keep the profit.

Exasperation is the word that springs to mind.

In the olden days, before any of us on this forum were born, GPs used to hold surgeries in the front room of their own home.

Oh FFS. I read this earlier. The entire article is shambolic.

A GP can see patients and is paid for seeing each one. But they have to have a place to do it in. So a GP can either rent a place or they can buy a place. Either way, they get a "notional" rent from the NHS and it in no way covers either the rent or the mortgage. The building is still owned by someone - either the GP if they've bought it or whoever the GP is renting it from. The building belongs to whoever owns it, not the NHS. Hence, if a GP retires, they can choose to sell the building or rent it to the incoming GP.

1. GP buys a property to turn into a surgery.
2. GP takes out a mortgage to pay for buying said property
3. Dept. of Health agrees to fund the mortgage cost under a scheme which has existed since 1965 called the cost-rent scheme, run for a PROFIT by Aviva.
4 DoH pays the GP the cost of the mortgage payments over the life of the morgage.
5. GP funds an endowment OUT OF HIS OWN POCKET which pays off the capital loan after 25 years.
6. GP then owns the property because all the taxpayer has funded is the ineterest payments on the mortgage.
7. Notional rent can be used to pay the mortgage payments once the rentable value of the property exceeds the morgage payment - this usually takes 15 years or more into the life of the mortgage.
8. The SMALL profit which eventually accrues from the difference between charges and notional rent payment is kept by the GP.

In a home purchase, the prinmciple of keeping the equity from increasing property values is somehow different? The only difference is that the GP has had his interest paid - but he still has to maintain, improve, heat and light, insure the building at his own expense, as well as pay staff costs and all the other elemenst of running a business. Is that really such a bad dealin return for a free medical service?

The authors are right that the system is inequitable and arcane. There are three systems: notional rent, cost rent and rent reimbursements. I asked for this information a few years ago and some practices get £4 per patient per year for the premises and some £35 per patient per year.

Compare this to the £65 per patient per year that the average GMS practice gets for providing the services: consultations doctor, nurse, reception, secretary pay, heating, cleaning, building maintenance, stationery, phone calls, stock control, furniture etc. £35 for just the building is disproportionate.

The rent reimbursement is for the capital investment in the building. Someone has to stomp up the cash and take the risk.

In 1997 I invested £80,000 in upgrading a practice, but when it was sold in 2001 I only received £40,000 back. The loss can only be offset if I make a 'profit' on my current building. This was after tax money, my savings.

I had to secure my home to get the £140,000 loan for the new building in 2001, then had to upgrade the building in 2004, costing another £80,000. So even if I sell it in 15 years when I retire, I have to sell for £260,000 just to break even having not recieved any interest on the capital invested. If I sell now, or fall ill and cannot continue to work I lose again on the building. That's why the rent-reimbursement exists, it is to compensate for not receiving interest on the capital invested.

As with any investment there is a short term risk for hopefully a long term return. Perhaps the journalists would want to buy their desk / office, secure the loan on their house, and hope that they can sell it off when they retire, all without getting anything in return?

Instead of going on about the amounts it may be more helpful to suggest how a cheaper system could be run, and look into the differences in reimbursements - a tenfold difference if you look at per-patient-per-year cost is unlikely to be justifiable (and the higher payments go to practices where the doctors do not own the practices and they are run by the health authorities or private companies). Just launch FOI requests at the PCT to get the figures and then produce something worth the title investigative journalism.