Your surgery is vital for your practice to operate, but a property is a significant expense. Just as the medical profession teaches us that early precautions can prevent pain in the future, a little forward planning with your premises arrangements can ensure that you will not waste time or money later, leaving you pain-free and able to focus on caring for your patients.
Imagine your premises has seen better days and you have the opportunity to move to a new surgery. Even though it is not far away, the move itself can trouble your patients. You need to spend time on patient relations as the move approaches, keeping them updated by speaking to them directly and ensuring that clear and regular notices are issued around your establishment, by post and in the press. So that you have time to focus on this, ensure that your property arrangements are put in place and passed across to your solicitors and professional advisers from the outset.
Your accountants should be able to advise you of the best structure for ownership of your new premises. For example, a number of dentists may wish to own it in their personal names under a partnership arrangement, or it may be more tax efficient to set up a company to purchase the premises. It would be worthwhile reviewing your partnership agreement at the same time, particularly to cover succession plans.
The initial decision to make is whether you would benefit more from owning a freehold or a leasehold property. The advantage of a freehold is that it belongs to you and you can do with it as you wish. However, it is also a major capital investment to fund from the outset and commits you to a specific location. A lease on the other hand is for an agreed period of time only, so is useful if you wish to move, although it does place you somewhat at the will of the landlord, potentially making you liable to pay rent and possibly service charges. A licence or a tenancy at will is even more flexible, but is unlikely to be suitable because it would not be transferable; it may involve sharing occupation, and is usually a very short term arrangement.
If you decide to take a lease, the first point to consider is that the landlord is likely to ask you for a rent deposit as security, so either ensure you have funds available or be prepared to offer a compromise on the lease terms such as offering guarantors.
Secondly, it is important to remember you will need the landlord’s consent to make alterations to the property. If the works are vital, it is best to agree them with the landlord from the start to save the risk of the landlord refusing consent in the future.
Before moving in, check if the landlord is planning works to the building or estate which may increase your service charges and ideally try to cap the annual service charge for which you will be liable. When negotiating lease terms, remember that any clauses that benefit you as tenant can also count against you at rent review because a more tenantfriendly lease could be valued as ‘deserving’ a high rent.
To cut down on rent, it can sometimes make sense to share your space with other businesses, such as therapists, doctors and, increasingly often, a pharmacy. You will probably need specific consent from the landlord before being able to sublet or share the property and you should again make sure this is agreed from the outset.
If you have an option to renew or a break clause, make a careful note of deadlines for serving notice to exercise them and seek legal advice well in advance to ensure that you do not lose the right.
When it comes to moving out, make financial provisions and arrangements with contractors well in advance so that dilapidations obligations will not come as a shock and think carefully about your exit strategy. For instance, do you need a break clause or the ability to assign or sub-let all or part of the premises? If you do this in the future, you will probably have to obtain the landlord’s consent and will have to pay its costs. The landlord will want to impose conditions, such as you effectively being the guarantor for the new occupant, so before entering the lease, consider the conditions you would be prepared to offer.
For a seamless transition to your new premises, try to coordinate timing by entering contracts for your old and new premises. If you exchange both contracts at the same time, you would then have the certainty of a completion date to end your current lease (or sell your freehold if applicable)
and to enter into your new lease (or purchase your new freehold if you have chosen that option).
It is important to seek input from your solicitor, accountant and surveyor for a property health check – they are there to advise you on property pain prevention, management and cure.