Fit for the Future's real estate challenge

Stephen Scott, real estate disputes partner at law firm, Shakespeare Martineau, says the Government’s 10-Year Health Plan presents complex real estate challenges

Stephen Scott (c) Shakespeare Martineau

Stephen Scott (c) Shakespeare Martineau

The Government unveiled the Fit for the Future 10-Year Health Plan in July 2025, with the aim of moving non-critical care into the community in order to relieve pressures on hospitals and increase the number of patients remaining at home while receiving treatment. While the concept is sound, and will be beneficial to the NHS as a whole, its staff and patients, it appears as though little thought has gone into whether the plan is achievable from a real estate perspective. With a number of challenges yet to be addressed, it's unlikely the Government will be able to deliver its ambitious targets within the timeframe.

Beginning this year, the plan includes the building of 250-300 neighbourhood health centres, with 50 set to be up and running by 2029. Rather than building new centres, much of the plan has been shaped around renovating and updating existing surgeries, extending the services they offer into a community health centre. In many cases this means increasing the building's footprint, which presents a number of challenges.

Surgeries often have private landlords or the freehold is owned by the practice's founding doctors. This means the NHS will need to seek permission from thousands of landlords and their tenants across the UK, ploughing time and resource into contacting and following up with all relevant parties. While there are specialist companies that act as landlords for many practices and so have a large portfolio that they can convert in one go, there are many more that are owned by individuals. It should also be noted  landlords and tenants may be resistant to signing up to the scheme, requiring educational resources and collateral to help showcase the benefits and persuade them to agree to the change. In short, simply getting surgeries signed up to become community health centres is a lengthy task in itself, even before any construction work has begun.

Once signed onto the scheme, there are several legal considerations that also need to be addressed. Leases, for example, will need to be updated to reflect the extended service offering. If the community health centre in question is selected to also provide mental health services beyond primary care counselling, the tenant may also have to apply for additional licensing and registration, as well as be subject to more stringent regulatory compliance.

Updating existing buildings also means planning permission will need to be submitted to extend or update the building's footprint. Despite the major reforms to the planning system being undertaken through the Planning and Infrastructure Act, this process can still be lengthy and delays are common.

For the plans to meet timelines set out in Fit for the Future, the Government should consider introducing a blanket approval for surgeries converting into community health centres to ensure a smoother process. Interestingly, an overhaul of the planning system for clean energy has recently been announced, streamlining the process to help fast track those projects, so these types of reforms are possible. While some may argue this may bypass necessary community consultation, if the changes are simple extensions and don't have any impact on neighbouring buildings, getting them through the system as quickly as possible should be the priority. Exceptions should of course be made where extensive work is being carried out, entirely new buildings are being constructed or other extenuating circumstances.

In addition to these legal challenges, there are also significant operational and financial challenges, which have largely been caused by the change in finance models, moving away from private finance initiatives (PFIs). 

PFIs have long been controversial. While the initiative delivered 126 new acute NHS facilities, long repayment plans dominated the headlines and the NHS' balance book, which ultimately led to their abolition in 2018. It's important to note that while new PFI agreements were banned in 2018, any agreements made before this will continue to be honoured. As the contracts typically last between 25-30 years, many PFI payments don't stop until 2040, in fact, the last PFI payment is due in financial year 2049/50 for an agreement that was signed in 1998. It is estimated that currently the NHS still owes £21bn through these finance schemes alone.

Although PFIs remain banned, the Government announced Fit for the Future will be funded using alternative forms of public-private partnerships (PPPs). Naturally, this was a divisive decision and received criticism from politicians, the media and the public, with many citing the failure of the PFI scheme as the reason for their scepticism. However, there are some major differences between how private capital will be utilised under the new scheme. For example, out of the first 27 projects approved, 16 are being funded under the NHS Local Improvement Finance Trust (LIFT), a public-private partnership where the NHS has a 40% equity stake in the investment. This is particularly important as it gives the NHS more control and shares financial risk between the private investor and the trust.

The size and scale of the project means there isn't a uniform partnership that can be easily replicated across all NHS trusts. Couple this with the project being in its infancy and it's difficult at this point to say the Government has completely avoided the mistakes made when utilising PFI contracts. However, harnessing different types of public-private partnerships gives trusts the flexibility to adapt to their individual financial and logistical circumstances.

It's clear then that Fit for the Future has been crafted with the intention of relieving pressure quickly on hospitals, however, it appears the Government hasn't assessed whether the realities of the NHS' real estate can support this plan in its current form. While a noble aim, without urgent reassessment and updates made to the legal framework, the planning system and methods by which capital is secured, it's unlikely Fit for the Future will meet the ambitious timeframe outlined. The Government needs to act quickly or risk a costly infrastructure project being hugely delayed, massive overspending and public backlash as a result. 

 

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