[DAYS_LEFT] days left of your Medeconomics free trial

Subscribe now

Your free trial has expired

Subscribe now to access Medeconomics

GP premises leases are source of potential liabilities

I noticed a headline in GP this week mentioning demands for more property investment in surgeries, and visited a client yesterday housed in a typically neglected health centre. His tenure, like many GPs in health centres is unclear. He has been practising there for 20 years without any formal agreement. He is now being encouraged if not pushed to sign a lease by the PCT.

Signing the lease is being suggested as a risk-free enterprise that will help the GP secure his tenure in the building. Indeed it will do that, but it potentially carries huge penalties and liabilities too.

Typically, a lease will be for a period of 21 or 25 years. During this period, the tenant (the GP) will have to pay rent. Unless there is a particular clause permitting the GP to exit or break the lease before the lease comes to an end, the GP could end up paying the rent even if the practice no longer exists or the GP has retired.

Leases spell out who is responsible for the maintenance of the internal and external repairs, but usually include a provision to return the building to the freeholder in the same condition that it was given to the GP at the beginning of the lease. This can be very expensive.

Finally, taking out a lease is a form of acquiring an interest in land, and stamp duty is payable on the value of the lease. In simple terms the capital value for the stamp duty to be applied is the annual rental x number of years of the lease, discounted back into present value. Nevertheless the potential stamp duty could be significant.

So, as I told this GP, make sure there are break clauses in the lease that match the needs of the GP. Try to reduce the exposure to the dilapidations as far as possible. Ask the PCT to reimburse the stamp duty if they want you to sign the lease

Leases are a source of potential liabilities - take advice!

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.

Database of GP Fees

Latest Jobs