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Surgery valuation

Q:When the senior partner retired he had the practice valued, at his own expense, at £800,000. The remaining partners felt this was excessive and had an independent valuation of £485,000. These are very different and we are due to discuss this. I believe we will not agree a figure and will need some form of arbitration. Could you provide some advice as to how we could get arbitration?

A: The vast difference in valuations could be due to one of two reasons.

First, it is vital a specialist valuer appraises a medical centre and it should not be undertaken by a general commercial valuer without the correct experience.

The specialist appointed needs to be able to assess quality in line with current NHS requirements and fully understand the workings of notional rent, rent abatement and primary care organisation grants.

Second, a valuation can vary dramatically depending on the instruction given to a valuer.

For example, if one is looking at a converted residential dwelling and a valuer is instructed to assess the 'market value', one would have regard to the use of the property as a surgery, but also its value to reconvert back to a residential house or its redevelopment value.

However, in many GP partnership deeds the valuer will be instructed to have regard to its market value on the assumption that it is restricted for use as a GP surgery premises. In such a scenario, the valuer would ignore any residential or redevelopment potential and it is often this that causes a substantial difference.

If agreement still cannot be reached, then most partnership deeds contain a clause to determine a settlement either by an independent expert or by the appointment of an arbitrator.

If an independent expert or arbitrator cannot be agreed between the parties, most partnership deeds allow for the appointment to be made by the Royal Institution of Chartered Surveyors (RICS).

The RICS operates a dispute resolution service. In matters of property valuation, it is common to use this process.

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