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Premises rent

Q: We are four partners of whom three (including me) own the surgery. We verbally agreed a rent from the fourth partner when we bought the premises from him two years ago. The practice gets notional rent reimbursement. We have now decided to increase the rent, and made the fourth partner a written offer. On a solicitor's advice we offered a licence to occupy rather than a tenancy agreement but have not yet received a response. I wonder what we should do if the partner rejects our offer and we cannot reach an agreement?

A: You need to closely liaise with your solicitor as, by accepting rent, you could be deemed to create a legal tenancy.

I assume the partnership receives the notional rent from the PCT and then it pays the rent to the property-owning partners. It therefore follows that the rent under the terms of a lease or a licence should follow the notional rent agreed with the PCT.

The notional rent is reviewed every three years and by the district valuer (DV), the new figure will be proposed to the practice (to all four of you) by the PCT. If you disagree with the figure, you have the right to make representations to the DV.

If you do not agree with the result, you would also have the right to appeal to the NHS Litigation Authority.

The majority of practices in a similar situation would use this route to establish a fair and reasonable rent to pay from the practice to the property owners.

If you had a legally binding lease, rental disputes would be determined by asking the Royal Institution of Chartered Surveyors to appoint an independent expert or arbitrator.

This process is not cheap as you would have to appoint a valuer to represent you and, on top of this, there would be the cost of the independent expert. The 'NHS route' described above can be successfully used where doctors are both owners and GPs within the practice and, with the lower costs involved, this is the preferred option.

The ability to terminate either a lease or licence is dealt with within the contract although, if a lease, the tenants will have further protection under the Landlord & Tenant Act.

In any event, it would not be an inability to agree a new rent under a licence or lease that would give rise to the agreement ending and one of the dispute resolution procedures above would be adopted.

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