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Watch on demand: GP practice property leases and succession planning

| Duncan & Toplis | 19 September 2023

We were joined recently by Will Ellis of BW Healthcare Surveyors, who together with our head of medical Kay Botley, delivered a very specific session for the healthcare sector – GP practice property leases and succession planning.

Will provided a summary of options available to GP surgeries when considering the future ownership of their premises, the pros and cons of sale and leaseback, putting a lease in place or transferring the NHS contract to another trust, and how to maximise the value of your premises in anticipation of disposal, and then what to do next.

Other topics included:

  • Finding new partners to invest into a GP surgery, and the common resistance and obstacles to this.
  • Sale and leaseback – i.e. selling the premises, usually to a third party investor, whereby the practice enters into a lease arrangement with the new landlord and the pros and cons of this including support from the NHS with rent, minimising perceived risk and responsibility of property ownership, and on the flip side,
  • An overview of the process involved, including valuation, heads of terms, NHS approval, and negotiating with third parties
  • Considerations when putting a lease in place, for example, ensuring a specific NHS GP surgery lease is used, that it is approved by both the District Valuer and the NHS, ensuring transparency of both the landlord's and tenant's responsibilities, existing mortgage considerations,
  • The option to transfer the contract to another entity, which could be a salvation for struggling surgeries or those who may be facing closure due to retirement of their GPs, 
  • How to maximise the value of the premises, for those who are considering a future sale, including ensuring notional rent is checked by a specialist surveyor with experience in primary care, lease agreements, and rental amounts are up to date, upgrading and improving your surgery.

Kay also shared valuable accounting, tax, and financial management insights for GP surgeries who are either considering, preparing for, or progressing a property disposal including:

  • Sinking funds – practices should ensure they retain funds to ensure the practice property is well cared for - whether you’re a tenant or a property owner – and to ensure that all partners contribute fairly towards the upkeep of the premises.
  • The impact on GP accounts where the GP surgery is a partnership asset, and taxes that impact partners where there are changes in property ownership.
  • The accounting treatment of SDLT on a new lease, situations where SDLT applies, and where property disposal may be exempt from SDLT.

Finally, Kay discussed Business Asset Disposal Relief (formerly Entrepreneurs Relief) and explained in what circumstance CGT applies, and an overview of the table of lifetime limits.

You can watch the recording below:

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