NHS Surgery Leases: Succession Planning and Risk Appetite for GP Tenants

For many GP partners, the surgery lease is one of the most significant financial and legal commitments they will undertake during their career. While attention is often focused on rent reimbursement, service charges or lease renewals, it is succession planning and risk appetite that are equally important considerations because decisions you make today can have lasting consequences for both individual partners and the wider practice. As general practice continues to evolve, with increasing workforce flexibility, partnership recruitment challenges, and changing models of care, GP tenants must carefully assess how their lease arrangements align with their long-term succession objectives and tolerance for risk.

Historically, GP partnerships operated on the assumption that retiring partners would be replaced by incoming partners who would assume a share of the lease liabilities. In parts of the country, this model has become less predictable. The recruitment of new GP partners can be difficult, particularly where younger doctors favour salaried or portfolio careers rather than traditional partnership structures. As a result, existing leasehold partners may find themselves carrying property liabilities for longer than anticipated, with fewer successors willing to assume those obligations.

This creates a fundamental succession planning question: who will take over the lease commitments when current partners retire? The answer is not always straightforward. A lease that appears manageable today may become a significant burden if future partners are unwilling to become tenants or if the practice struggles to recruit replacement partners with an appetite for lease liabilities.

Many GP tenants underestimate the extent of their ongoing obligations under a surgery lease. Depending on the lease terms, outgoing partners may remain exposed to lease liabilities through authorised guarantee agreements, partnership indemnities, or other contractual arrangements. Even where a retiring partner successfully exits the partnership, there may be circumstances in which they retain residual exposure, e.g. if they are not removed from the lease once they have left the partnership (achieved by way of a lease assignment). Effective succession planning therefore requires more than identifying future clinical and non-clinical partners. It requires a clear understanding of how lease liabilities will be transferred and whether incoming partners are willing to assume those leasehold responsibilities.

Risk appetite varies significantly between GP partners and practices. At one end of the spectrum are practices that view lease obligations as an acceptable commercial risk; supported by the DV Report (a mandatory requirement for all NHS leases under the NHS Premises Costs Directions), a stable/growing patient list, strong finances and confidence in future partner recruitment. These practices may be comfortable committing to longer lease terms and accepting a degree of uncertainty regarding future succession. At the other end are practices that place a higher value on flexibility and risk reduction. These practices may be concerned about future recruitment challenges, changing NHS estate strategies, or the potential concentration of financial risk among a shrinking number of partners. Neither approach is inherently right or wrong.

The critical issue is ensuring that the practice’s lease structure reflects its’ collective risk appetite. A practice with a low tolerance for long-term property risk should carefully consider whether lease commitments extend beyond the period over which the partners have reasonable visibility of succession arrangements. Conversely, a practice willing to accept greater risk may place more emphasis on securing long-term occupational stability.

Succession planning should form part of every major lease decision. Before entering into a new lease or lease renewal, GP partners should consider several key questions:

• How likely is it that future partners will be willing to become leaseholders?
• What is the age profile of the current partnership?
• Are there identified successors within the practice?
• How easily could lease liabilities be redistributed if a partner retires unexpectedly?
• Would the practice remain financially resilient if partner numbers reduced?
• Does the lease provide sufficient flexibility to accommodate future organisational change?

These considerations should be evaluated alongside traditional commercial terms such as rent, repairing obligations, and lease length.

One of the most common mistakes in GP property planning is delaying succession discussions until a partner announces retirement or the lease comes to an end. Break dates and the lease termination date should be diarised and we recommend you start planning at least 12 months in advance of any break date or the lease terminating so that you maximise your negotiating leverage.

The answer is not ‘the partnership’ because a partnership is not a business vehicle in its’ own right, unlike a limited company!

All Partners should be individually named as tenants on the lease, unless they are serving out a mutual assessment period. But when that mutual assessment period is successfully served out, that Partner should go onto the lease. Likewise, a retiring Partner should remain on the lease until the point at which they leave the partnership. This means that all partners are liable for the lease obligations and not a ‘selected few’.

If you make a commercial decision that you don’t want all Partners as ‘named tenants’ on the lease then you should have indemnities built into your partnership deed. But if you are a ‘named tenant’ on the lease, are you happy to rely on a contractual indemnity in the partnership deed for repairs/dilapidations? If your partnership deed has lapsed, you risk other partners just walking away claiming they have no liability. As a named tenant on the lease, you are also the Partner who may be served with a section 25 eviction notice (usually as part of a lease renewal process) and does that feel comfortable?

HM Land Registry will only register up to 4 partners’ names, but this is not a reason to limit the number of partners on an NHS surgery lease to 4. To say that it costs money to change the names on the lease when there is a change in partners, is not a good reason because it ignores the risk to the partners. The 4 partners named at HM Land Registry can be selected from the names on the lease in any order you choose. Commercially, if you know a partner is about to leave the partnership very shortly then it may decide not to include them on the lease, as long as the partnership deed is up-to-date. We will be exploring this issue in more depth in an upcoming blog.

For GP tenants, succession planning and risk appetite are inseparable from effective lease management. The key question is not simply whether a surgery lease works today, but whether it will remain sustainable as partners retire, recruitment patterns change, and general practice continues to evolve. Practices that proactively assess their succession prospects, understand their risk exposure, and align lease commitments with their short-term and long-term objectives are likely to be better positioned to manage uncertainty as well as protect both the practice and individual partners from unforeseen property-related liabilities.

In an increasingly complex primary care environment, a surgery lease should be viewed not merely as an occupational requirement, but as a strategic commitment that must be considered through the lens of both succession and risk. If you would like to discuss anything we have covered in this piece, or anything else, please get in touch here!