Health Bill delay slows investors' building plans

Leading property developer fears 'stagnation' after protests against NHS legislation

More than 100 new surgeries and health centres around the UK have been put on ice because of delays to the Health and Social Care Bill.

Potential projects running into hundreds of millions of pounds are being held up because primary care trusts, the bodies in charge of GPs' surgeries, have to wait until the new Bill becomes law which is now not expected until next year.

For example, Primary Health Properties (PHP), a listed property investor and one of the biggest investors in GP surgeries in the country, has been prevented from buying up to 40 separate projects – worth around £120m – until the new legislation comes into force.

Harry Hyman, the owner of Nexus Healthcare, which manages PHP, said: "Primary health care developers are faced with the uncertainty and lack of progress with the Health Care Bill. It is deeply frustrating for those that want to invest in the sector. We want to put more capital into the sector but we are unable to due to the stagnation.

"The irony is the whole point of the Bill is to allow more services such as diagnostics to move out of hospitals and into surgeries, but the delays have meant the development of these surgeries cannot start happening," he said.

It can take up to three years to plan and build such projects and property experts are warning that this time delay will lead to a long delivery lag. All primary care trusts have received letters from the Department of Health to not sign any new contracts until the bill passes.

The Health Secretary, Andrew Lansley, who first proposed the bill in July in a white paper, has met resistance from a multitude of sources within the healthcare sector. However, the bill is likely to get Royal Ascent next February.

It aims to give more power and choice to GPs and patients by reducing management and opening up more services to private companies and the voluntary sector. Progress in technology and the web has meant many services can now be handled in surgeries rather than hospitals. But detractors argue it will weaken the ability of the authorities to fight disease and tackle health emergencies.

Lord Crisp, the previous chief executive of the NHS and a former permanent secretary at the Department of Health, has said the bill falls short of making the changes needed to improve the NHS.

PHP, founded in 1995, is listed in London and owns more than £500m of doctors' surgery properties. Its management company, Nexus, is launching a Healthcare REIT (real estate investment trust), to invest in the private hospital, elderly and specialist care markets.

The owners of healthcare property came under fire earlier this year with the demise of care home operator Southern Cross. It went into administration this summer due to its expensive rental agreements with landlords. Southern Cross had agreed sale and leasebacks of its properties on high terms that were unsustainable when occupancy fell. But Primary Health Properties does not agree rent deals of more than 65 per cent of the operator's earnings.

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