Safeguarding your GP partnership property: what owners need to know 

For many GP partnerships their property is not only a vital resource for delivering patient care, but it also represents one of their most important and valuable business assets. Whether the property is owned or leased, it comes with some unique challenges, and ensuring the proper management and protection of that property is crucial in preserving its value. 

Safeguarding the property involves maintaining up-to-date property titles, navigating succession planning and understanding the importance of sales and leasebacks as strategic options, as explored below. With tailored legal advice, GP partnerships can confidently address these unique challenges and meet their operational and investment goals. 

Partnership agreement 

A well drafted partnership agreement is the backbone of proper management for any GP practice. A partnership agreement helps to establish clear roles, responsibilities and, amongst many other provisions, should contain processes for handling property related decisions and provisions for handling partner transitions such as retirements or departures.  

By creating a structured and adaptable agreement to outline these details in advance, GP partnerships can safeguard their operations and property thereby reducing the risk of disputes between partners which may jeopardise their operations and stability. Seeking specialist legal advice ensures the agreement is tailored to the practice’s unique circumstances providing additional protection and peace of mind.  

Keeping the property title updated  

When it comes to property ownership it is often the individual GP partners who are named as the registered proprietors on the legal title to the property, either for themselves or depending on the number of partners in the practice, on trust for some or all of the partners. Due to this structure, when a property-owning partner retires or a new partner joins the practice, it becomes necessary for the legal title (and any security registered against the property) to be updated to reflect the change that has taken place.  

Updating the legal title is often seen as an administrative exercise and left until the last moment or forgotten about entirely. As time goes on leaving this task unresolved can result in complications such as disputes between the current and retired partners, delays in selling or dealing with the property or even difficulties in proving ownership. Additionally, if the property is subject to secured lending failure to notify the lender of a change and keep the legal title updated could be a breach of the lending conditions.  

All of these complications can lead to increased and unnecessary costs which can easily be avoided by ensuring the legal title is updated at the earliest possible opportunity following a change in the property ownership structure. 

Sale and leaseback 

Under the NHS (General Medical Services – Premises Costs) Directions 2024 GP contractors holding a general medical services contract are eligible for consideration of rental reimbursement. This reimbursement is known as notional rent where a GP partnership owns the property from which it operates and rental cost reimbursement where the property is owned by a third party. As a result of this government backed rent reimbursement GP properties are seen by many investors as a stable low risk investment. Could a sale and leaseback be the key to unlocking long-term sustainability? 

A sale and leaseback transaction involves the property being sold to an investor or third party. The GP partnership then leases the property back from the new owner, allowing them to continue to operate from the same location. This type of arrangement can help the property-owning GP partners looking to retire and help GP partners release equity tied up in the property. It could also help attract new partners by removing the need raise the significant capital needed to buy into the property, however it can also have drawbacks. If the lease is granted without security of tenure the partnership will not have an automatic right to renew the lease when it ends which means they could be required to vacate at the end of the lease term whereas owning the freehold interest in the property offers the partnership complete autonomy over the property.  

Sale and leaseback arrangements have grown in popularity but depending on the specific circumstances and aims of the partnership it is not always the most appropriate solution to achieve the desired outcome and so GP partners should seek specialist legal and financial advice at an early stage and give careful consideration to their specific circumstances. 

Key lease terms 

A commercial lease imposes both positive and negative obligations on a tenant such as a positive obligation to pay rent and maintain the property to an appropriate standard as well as negative obligations not to use a property in a way that is not authorised by the landlord.  

Entering into any lease is a significant decision that can have long term implications, so if a sale and leaseback is being considered careful consideration and negotiation is essential. This is especially critical when rent reimbursement is sought as the terms of any lease will need to be approved by a district valuer before any application for rent reimbursement can be approved. 

With the importance of maintaining a general medical services contract in order to be entitled to reimbursement of rental costs, GP partners would be well advised to consider seeking break option permitting them to terminate the lease should the general medical services contract come to an end. 

Commercial leases typically require the landlord’s consent before a tenant assigns or underlets the property. GP partners may benefit from negotiating added flexibility within their commercial lease to allow them the ability to assign the lease to another GP partner or to a different GP practice. Having this predefined ability to assign the lease within the healthcare sector can avoid prolonged negotiation with the landlord and ensures smooth transitions during partnership changes. 

Navigating lease negotiations requires professional guidance and GP partnerships should consult with specialist commercial agents and seek legal advice to ensure the lease terms align with their operational goals while offering appropriate safeguards.  

Conclusion 

Navigating the complexities of GP partnership property requires careful planning and expert legal advice. By addressing these challenges early GP partnerships will be in the best position to harness opportunities which become available and safeguard their properties to ensure financial stability and growth for the future. 

If you are a property owner or partner seeking tailored advice on property-related matters, our experienced team is here to help.