A Premier League Transfer

The ongoing transfer of 96 redundant NHS sites to English Partnerships means large savings for the Department of Health, and the subsequent ownership by English Partnerships means that a significant proportion of the sites are to be developed into desperately needed key worker accommodation.

The transfer itself, however, is not a straightforward matter, and the team at international law firm Eversheds, were tasked with finding a solution. If the sites were to have been transferred interdepartmentally, a statutory transfer would have been appropriate - simply moving functions and personnel from one government department to another.

In this case, however, a statutory transfer was not possible, as, although English Partnerships is a government agency, it is not a government department.

Claire Morgan, who led the Eversheds team said, “As well as having to devise a new way to transfer huge assets, we were tasked to achieve agreement both for the overall transfer, and the immediate transfer of the first tranche of 53 sites within ten weeks of instruction, an incredibly short timescale for this kind of work. The date for the completion of the agreement was non-negotiable, so we worked hand in hand with English Partnerships to establish exactly what could be done.”

“Nothing quite like this has been done before,” she added, “but the agreement that has been reached means that English Partnerships, as the appropriate agency, can deal with the disposal of surplus Government assets in a way which helps achieve other aspects of the Government’s agenda. Naturally, each party involved had their own objectives; the Department of Health needed the land for as long as possible for ongoing hospital functions, whilst EP wanted to take control of the sites as soon as possible to prepare them for the market in terms of securing planning permission etc.

To balance these differing needs, a timetable was put in place for a staged transfer of the sites, with EP taking 53 in the first tranche and accepting management of a further 11 pending transfer. The Department was therefore relieved of the related estate management function, and a number of staff transferred from Department of Health to EP as part of the arrangements.”

With the timescales agreed, the next step in this complex process was to agree the financial side of the deal. A value was agreed for the sites, and a profit sharing agreement put into place. All the costs from owning and managing the sites are to be recouped by English Partnerships from the onward sale of land, and any profit then shared with the Department of Health.

English Partnerships paid an agreed global figure, delivered in tranches as the sites were transferred. Tranches one and two have now been completed, with tranche three in the pipeline. The only slight disappointment is that stamp duty land tax had to be paid on the consideration since this is a sale of the sites, rather than an internal departmental transfer.

English Partnerships have also had other obstacles to overcome. Unsurprisingly, some of the NHS sites covered by the agreement are very valuable to developers. The Department of Health naturally wanted to make as much money as possible from the sale of the sites, but English Partnerships had their regeneration brief to consider, with the provision of key worker and affordable homes high on their agenda.

The regeneration agency promotes good design guidance in the housing stock developed on land which it sells and this has an impact on the value. This impact on value had to be reflected in the overage arrangements between the Department of Health and English Partnerships so that both the Department and English Partnerships could deliver on their respective agendas.

Claire Morgan added, “With the third tranche of sites due for transfer at the end of March, our work on this project is nearly complete. The sites left are the most difficult in terms of timetable,  however, we have built in flexible lease back agreements, so that the NHS can have use of a site for as long as necessary, for example, until a new hospital is completed.”

“This whole process has been characterised by finding common sense solutions to a series of potential issues, and we are delighted with the outcome. At Eversheds we have extensive experience in dealing with government office transfers, and have previously worked with English Partnerships and other regional development agencies, as well as working on asset transfers during the set up and merger of NHS trusts - all of which put us in an ideal place to advise on this groundbreaking transfer.”