The 2013 PCT Estate Transfer Scheme was established to transfer the property, rights, and liabilities of the dissolved Primary Care Trusts (PCTs) to the Secretary of State for Health or other NHS bodies. While 1 April 2013 was a long time by most of our standards, the PCT Estate Transfer Scheme which came into effect at that time is still as relevant today as it was then.
Not all Trusts will hold former PCT owned community estate but, if yours does, there are some key principles you should be aware of in order to effectively manage it and comply with your statutory obligations.
Core principles
Your community estate will be subject to two core responsibilities:
- Protect existing NHS occupiers – the holding Trust must take “all reasonable steps” to ensure any health-service occupier in situ at the transfer date can remain. Before seeking to terminate any occupation, check whether the occupier still relies on that right to remain.
- To transfer a property back to the Secretary of State For Health and Social Care (SoS) in certain circumstances. If any trigger arises, the trust must convey the land (with all rights and liabilities) back to the SoS – for no consideration – “as soon as practicable”. The events are intentionally broad and include:
- Appointment of a liquidator/receiver over the trust
- Cessation of NHS use of any part of the land
- SoS (or other “competent authority”) decides to dissolve the trust
- All NHS service contracts under which the trust provides NHS services are terminated or expire without renewal
- The trust decides or resolves to dispose of its interest (sale, charge, long lease etc.)
- Sub-division of title not consented to by SoS
- Breach of any provision of the Scheme by the trust
Routine estate dealings are carved out of this obligation meaning they do not trigger claw-back provided any required SoS consent is in writing:
- Transfers to statutory utility bodies
- Occupational leases ≤ 3 years, no premium
- Licences terminable on 3 months’ notice
- Transfers that purely comply with the incumbent-user duty
- Mortgages/charges consented to in writing
- Part transfers consented to in writing
- Any other disposition specifically consented to by the SoS
Practical compliance checklist
- Flag PCT estate in your estate database so your estates teams know that there are additional management requirements to the rest of your estate
- Before marketing a property for disposal, seek SoS consent to ensure there are no surprises
What about leasehold property?
The transfer scheme creates a statutory “gate-keeper” role for the SoS over every lease that transferred from a PCT on 1 April 2013. They govern renewals, non-renewals, break options and assignment mechanics, ensuring the SoS (or a nominated NHS body) can step in and preserve strategic sites for NHS use.
Renewals
- A trust must not enter into a renewal lease without the SoS’s prior written consent
- That consent will only be given if the transferee signs a deed of covenant repeating all the relevant transfer scheme obligations in the new term
If the trust proposes not to renew, it must:
- Give the SoS at least 4 months’ written notice before the contractual expiry, and
- Offer to assign the existing lease to the SoS or a nominee on the same terms
The notice must give expiry dates and any relevant deadlines so the SoS can act in time.
Breaks
Before serving (or responding to) any break notice the trust must:
- Offer the lease to the SoS/nominee, and
- Serve a notice not less than 4 months before the last date for serving the landlord-break notice, setting out the break option details
The break can only be exercised if, two weeks before that last service date, the SoS has not confirmed that he wants the lease.
Diary management is critical: miss the SoS timeline and you cannot break.
Tenant covenants
Ongoing covenant compliance & breach notices
- Trusts must comply with all tenant covenants and must promptly forward any landlord breach or warning notice to the SoS
- If the SoS (or nominee) incurs costs to remedy a breach, the trust must reimburse 100 % of those costs
Assignments to SoS
It should be noted that if the SoS chooses to take an assignment pursuant to the above provisions, that transfer “takes effect notwithstanding”:
- any prohibition on assignment in the lease
- any requirement for third-party consent, or
- any conflicting statutory or contractual restriction
In short, the SoS’s decision trumps everything else.
Compliance checklist for estate teams
- Lease event diary – flag every expiry and break date; set reminders 6 months out
- Standard SoS notice template – include key dates, intention (renew / not renew / break) and offer of assignment
- Four-month rule – no notice, no decision until SoS window has run
- Deed of covenant – mandatory on renewal; keep precedent agreed with SoS
- Breach monitoring – forward landlord notices immediately; ring-fence budget for possible SoS remediation bills
- Transaction sign-offs – board papers and solicitor reports must confirm Section 9 compliance before execution
Why it matters
Failing to observe the above obligations can render a renewal, surrender or break ineffective, expose the trust to indemnity claims and - because the SoS override runs ahead of third-party rights - create title defects that delay or derail future transactions.
Treat the SoS as a mandatory stakeholder for every lease decision and you will stay on the right side of the Transfer Scheme.
Transfers to the SoS
On a trigger event the trust must notify the SoS immediately and then execute the re-transfer “as soon as practicable”. The SoS right ranks ahead of later interests, so managers must not create competing rights (e.g. mortgages) without written SoS consent.
When claw-back happens, Public Dividend Capital is deemed repaid down to the land’s net book value (NBV). If NBV has risen since 2013, the uplift is also repayable to the SoS. Finance teams must model potential adjustments.
Refusal or waiver of clawback
The SoS can:
- Refuse to take the land back, letting the trust sell; the SoS then decides whether Schedule 1 claw back obligations will bind the buyer
- Waive claw-back altogether in five circumstances (partial non-NHS use, minor breach, loss of some contracts, subdivision problems, or incorrect approval data)
Where clawback applies
If the SoS refuses a transfer, and the property is sold subject to clawback, the SoS is entitled to a 15-year overage period. If a Trust (or its successor) disposes of any part of the property it must pay 50 % of the uplift above the “base value” (usually the value at transfer). The payment is due on completion and is calculated on the higher of consideration actually received or open-market value.
