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Protecting your investment upon Retirement

If you are a property owning partner who plans to retire and keep your premises as an investment, allowing the practice to continue to run from them, then this blog is for you. We will be looking at some other variations of premises ownership and retirement, in future blogs. 

There are many things to consider when you retire, not least being what will happen to what is probably your biggest investment – the surgery building. Here are some of the main considerations: 

1. Whilst you have been practising from the surgery, you will have been receiving notional rent under the Premises Costs Directions 2013 (”PCDs”). Entitlement to the notional rent payment arises solely as a result of the partnership holding a ‘core contract’ with NHSE/the CCG and carrying out the services from owner occupied premises. 

Following your retirement from the partnership, you are no longer a contract holder and so you lose any entitlement to notional rent. It is the continuing partners who hold the contract and they will become entitled to reimbursement of premises costs under the PCDs.

2. Before retirement, you may have relied on the Partnership Deed to protect your premises income and to identify those property-associated costs which were to be paid by you, as property owner, and those to be paid by the practice, as business occupation costs.   

At the point you retire, you are no longer a party to the Partnership Deed so you need to put a new legal arrangement in place to ensure that have your property interest adequately protected.  The way to do this is to put a lease in place. 

3. A lease will set out the obligations on both you, as Landlord, and the Practice, as Tenant, in resect of the property, as well as protecting both parties’ interests from a legal perspective.  The lease may include provision for the repair and maintenance of the building; the length of occupation and any rights of early termination; what costs each party is responsible for and what changes can be made to the property with or without your permission. 

There are many factors to consider when deciding what the terms of the lease will be. How long should it last for? What will happen at the end of the lease term – will you be happy for the tenant to have a new lease? Who is to be responsible for the various elements of the building that may need to be repaired over time? These factors, along with others, will need to be thought through in advance of your retirement. 

It is important that you take specialist advice from solicitors experienced in dealing with NHS surgery leases, as if you do not have the correct provisions in the lease you risk it not being approved for funding from the CCG. 

4. Timing is very important. If you don’t put the lease in place prior to the date of your retirement, you run the risk of the medical practice accruing protected tenancy rights once you leave the partnership. It can also help your negotiating position if you are able to agree terms whilst you are still a partner in the business. Crucially, any lease terms will need to be approved by the CCG in order to guarantee rent reimbursement, which can take a considerable period of time. If you have a mortgage secured over the surgery premises, you will also need your lender’s consent to the granting of the lease. 

Our next blog looks at the scenario of a retiring partner who owns a share of the surgery premises along with others who will be continuing in partnership, and the retiring partner wishes to retain his or her share in the premises. This is a scenario that we are seeing more of, as fewer incoming partners are looking to buy-in to premises. 

We advise that GP partners start thinking about their property plans at least 2 years prior to their planned retirement date. If you are considering retirement and would like to discuss your options in more detail then please contact Daphne Robertson on 01483 51555 or info@drsolicitors.com

Our Team


New planning regulations to impact on Surgery flexibility and valuation

If you own your surgery premises, you ought to be aware of the recently announced changes to the  Planning Regulations.

The new planning regulations come into force on 1 September 2020 and are intended to reduce red tape and speed up development.   One change is that  GP Surgeries which currently operate under Use Class D1 will be  re-designated as new Use Class E(e)â but what does  that actually mean for you? 

The most significant change lies in all the other uses which now form part of Use Class E (see the full list at the end of this article).  From 1 September 2020, any premises with a Use Class E permission is permitted to change to any other use within Class E without having to obtain a new planning permission.  This change applies to existing premises as well as new ones. 

Possible benefits?

For GP Surgeries, this means that you could switch the use of your surgery premises  from surgery to retail, offices, professional services or as a crèche (as just some examples) without necessarily having to apply to your local authority for a planning permission for change of use.  

Wider opportunities for alternative uses may widen the potential pool of buyers which in turn, could increase value (at least for those premises that are at the end of their useful life as a surgery and are to be sold on for different purposes).  We will have to wait and see the full implications of this change. 

Even if you are not currently thinking of selling your premises, you could still benefit from the changes.  It will be easier for you to use part of the surgery premises for another use Class E – for example if you wanted to change part of your existing premises into a pharmacy or community café.

A word of caution

Whilst the changes could prove to give a lot of flexibility to property owners going forward, it is important to remember there are other restrictions that could limit how you can use your property. Your Planning permission could contain particular conditions which may limit the use of the property, and may override the changes permitted under the new Regulations.  Associated building works may require their own independent planning permission and covenants on the legal title to the property may impose specific restrictions as to use which you may need to deal with.  It is advisable to seek professional advice and undertake careful due diligence on all these areas prior to making a significant change to your property, or indeed if you are buying into surgery premises hoping to take advantage to the flexibility that these new Regulations offer going forward.

Finally, a note of warning to any Landlord’s out there – you will need to take particular care when agreeing lease terms with your tenant, to ensure you do not inadvertently give your tenant the ability to take advantage of the flexibility afforded by the new Regulations without safeguarding your investment. 

Please do get in touch if you have any questions about your surgery premises or running your practice.  Call Daphne Robertson on 01483 511555 or email info@drsolicitors.com


“Class E. Commercial, Business and Service

Use, or part use, for all or any of the following purposes:- 

(a)        for the display or retail sale of goods, other than hot food, principally to visiting members of the public,

(b)        for the sale of food and drink principally to visiting members of the public where consumption of that food and drink is mostly undertaken on the premises,

(c)        for the provision of the following kinds of services principally to visiting members of the public:

(i)      financial services,

(ii)     professional services (other than health or medical services), or

(iii)     any other services which it is appropriate to provide in a commercial, business or service locality,

(d)        for indoor sport, recreation or fitness, not involving motorised vehicles or firearms, principally to visiting members of the public,

(e)        for the provision of medical or health services, principally to visiting members of the public, except the use of premises attached to the residence of the consultant or practitioner,

(f)         for a creche, day nursery or day centre, not including a residential use, principally to visiting members of the public,

(g)        for:

            (i)      an office to carry out any operational or administrative functions,

            (ii)      the research and development of products or processes, or

            (iii)     any industrial process,

            being a use, which can be carried out in any residential area without detriment to the amenity of that area by reason of noise, vibration, smell, fumes, smoke, soot, ash, dust or grit.