NHS Property Services | Overcoming the 5 biggest hurdles to early leasing agreements in NHS estate projects

An example of early lease agreements in practice

For instance, in the Chiswick Health Centre project, an early lease agreement helped secure commitments from all occupiers for all stages of the project. Including exit from the old health centre and a move to a temporary facility before moving to the new health centre. Our persistent negotiation and clear communication helped align all stakeholders and ensure the project stayed on track.

Conor Doyle

Development Management Partner, NHS Property Services

Early leasing agreements require consensus among a diverse group of stakeholders. Achieving alignment on project principles, service requirements, and operational needs is complex, especially when priorities differ or evolve. Early and frequent engagement is essential to uncover workflow issues, clarify expectations, and build trust.

For example, in the Chiswick Health Centre project, securing a Commissioner Comfort Letter with NWL ICB enabled a consistent approach to secure Agreement For Leases with all occupiers, which was vital and required persistent negotiation and transparent communication.

NHS service models are constantly evolving, and future clinical needs may not be fully defined at the outset. This uncertainty can make it difficult to “right-size” spaces and commit to lease terms that will remain fit for purpose.

Early healthcare planning and space modelling - engaging clinical stakeholders to map workflows and anticipate future changes helped us avoid costly redesigns and late-stage changes in projects like UHL and Surrey.

Here are some tips to help you manage uncertainty:

Engage clinical stakeholders early to map out workflows and anticipate future changes.
Use healthcare planning and space modelling to “right-size” facilities before committing to lease terms.
Regularly review service models to ensure space remains fit for purpose as needs evolve.
Build flexibility into agreements to allow for adjustments if clinical requirements change.
Document assumptions and potential risks at the outset to inform future decision-making.
Avoid costly redesigns and late-stage changes by validating requirements with all relevant parties.

Securing vacant possession, navigating planning permissions, and complying with NHS procurement regulations can introduce significant delays. External factors, such as government eviction regulations during COVID-19, have caused unexpected setbacks for some projects, impacting on the timing of lease agreements and project delivery. Proactive legal mitigation strategies and flexible planning are key to managing these risks.

Here are some tips to help you avoid future delays:

Identify legal and regulatory risks early: Map out all potential legal hurdles, such as planning permissions, procurement regulations, and vacant possession requirements.

Engage legal advisors from the outset: Involve legal experts early to review agreements, flag risks, and advise on compliance with NHS and government regulations.

Monitor external factors: Track changes in government policy (e.g., eviction regulations) and assess their impact on project timelines and lease agreements.

Build flexibility into agreements: Draft agreements with clauses that allow for extensions, phased occupations, or adjustments if regulatory delays occur.

Maintain transparent communication: Keep all stakeholders informed about legal progress, risks, and contingency plans to ensure alignment and avoid surprises.

Document all assumptions and decisions: Record the basis for legal decisions and any agreed mitigations to support future negotiations and dispute resolution.

Regularly review and update legal strategy: Schedule periodic reviews with legal and project teams to adapt strategies as new risks or regulations emerge.

Early leasing agreements are often contingent on securing funding and demonstrating value for money. Market volatility, loss of external funding streams, and the need to maximise capital receipts from disposals can complicate negotiations.

Structuring agreements to align with financial year-end targets and cash flow requirements, such as short-term leasebacks and joint development agreements, has been crucial in projects like Chiswick and Northwood & Pinner. To learn more about how financial modelling supported the completion of these projects, read their case studies below.

Read about Chiswick Read about Northwood & Pinner

Ensuring a smooth transition from old facilities to new ones, while maintaining uninterrupted clinical services, adds further complexity. Lease agreements must be flexible enough to accommodate snagging periods, phased occupations, and unforeseen delays. Clear communication and robust risk management help keep all parties aligned and responsive to changing circumstances.

Here are some tips to consider implementing to avoid programme and transition risks:

Build flexibility into lease agreements to accommodate snagging periods, phased occupations, and unforeseen delays.

Develop robust transition plans to maintain uninterrupted clinical services during moves between facilities.

Communicate clearly and regularly with all stakeholders to ensure alignment and responsiveness to changing circumstances.

Identify and document key risks early, including dependencies and critical milestones.

Establish contingency plans for potential delays or disruptions, such as temporary accommodation or service adjustments.

Monitor progress closely and review risk management strategies at regular intervals.

Assign clear responsibilities for transition tasks and risk management to dedicated team members.

Feature	Agreement for lease	Lease
Nature	Conditional contract to enter into a lease in the future.	Binding contract granting immediate rights of occupation.
Conditions	Often dependent on planning permissions, building completion or regulatory approvals.	No conditions – lease is effective once signed.
Occupation rights	Does not grant full rights until the lease is completed. May allow early access (under license) for specific purposes, such as fit-out or preparatory work.	Grants exclusive possession and full tenant rights immediately.
Purpose	Provides certainty and planning for both parties before the lease starts.	Provides legal security and enforceable tenancy rights.
Use in NHS/ Commercial projects	Common in complex projects where timing, funding and stakeholder alignment are critical.	Used once all conditions are satisfied and the occupation is ready.

Overcoming the 5 biggest hurdles to early leasing agreements in NHS estate projects

An example of early lease agreements in practice

Overcoming the biggest hurdles to early lease agreements

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