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Partners and notional rent

Q: One of the partners at the practice owns the premises and receives the notional rent. He feels that all the partners should pay equally for the building's upkeep and maintenance. I understood that GP landlords receiving notional rent should bear responsibility for all external repairs, decoration and insurances, while the tenants, including non-property owning partners and the landlord, are responsible for internal repair and decoration. Is this correct?

A: Where one partner is the sole premises owner, although it may not be necessary to create a full tenancy, it would be wise to address the issue in your partnership agreement. That will enable you to properly attend to the notional rent distribution and respons­ibility for repairs and so on.

The owner should be regarded as the landlord and the practice (all partners) as tenants.

In your case, as all the not­ional rent is passed to the owner your interpretation is correct. The notional rent is assessed as if a lease existed where the landlord bears responsibility for external decoration, external and structural repairs and the building insurance.

The rent includes an element (usually between 5% and 7.5%) towards the costs of such rep­airs and insurance. Under this scenario, the practice would bear the cost of all internal non-structural repairs.

There is inevitably a complication when improvements rather than repairs are undertaken. If improvements are made by the partnership, any notional rent related to them should be retained by the partners. If the landlord makes them, all notional rent should continue to go to the landlord.

The alternative is the partnership bearing responsibility for all decoration, repairs and building insurance but, in ret­urn, it should receive between 5% and 7.5% of the notional rent.

The amount should be placed in a reserve fund, which can be increased to fund future repairs.

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