Recent years have seen a notable growth in the number of GP practices sharing space in their premises with other primary care practitioners, such as pharmacists and physiotherapists.
For GPs it represents a cost-effective way of generating rental income for the practice. For example, the introduction of a pharmacy into GP premises has become an attractive choice as an income stream, with multi-partner practices and high patient numbers relatively advantaged in attracting potential pharmacist tenants. In addition, sharing accommodation aligns with a central NHS policy aspiration to encourage the location of primary health care practitioners on a common site to enhance inter-disciplinary options in delivering primary care to patients.
Where a GP practice looks to share space with other health practitioners it is necessary to check that this is permitted or requires the lease to be re-written (a variation agreement). Thereafter, it is important to identify the basic ground rules that will help underpin a stable working relationship between the parties. It should address their rights and responsibilities with respect to sharing and sub-letting. The sharing professionals must use the space allocated to them in ways that match the terms of the GP practice contract. Failing this, the entitlement to reimbursement of costs under the NHS directions for premises may be refused. Additionally, the lease and rent for reimbursement must be approved by the NHS Commissioner.
Key issues to address in the lease
A standard commercial lease contract needs to be adapted to the specific circumstances of GP premises and partners and the sharing professionals:
- Length of the contract; is there a break clause? There may be contrasting views about the preferred length of the contract across professional groups to accommodate. Hence the importance of including a break clause that spells out how and when lease obligations may be set aside.
- The exact size and character of the space offered for rent. The space requirement for a pharmacy, for example, may be easier to agree than the more specialised space demands of a physiotherapist.
- What are rules regarding payment of rent, and any option to review. A landlord may regard sub-letting as a justification for raising rents.
- Level of service charges, including insurance.
- Level of repair and maintenance charges (of rising importance in recent NHS England reports).
- Rights of the tenant, such as to parking and communal areas.
Clarification of the rights and responsibilities of the different interests negotiating a premise lease, and developing an economically robust practice model, must be balanced by a degree of flexibility in the assignment of a lease, subletting and sharing space, given the differing constraints evident across professional groups.
Which way is GP practice policy moving?
NHS England acknowledged (e.g. in the General Practice Premises Policy Review, June 2019) that too many primary care premises are not fit-for-purpose, and a barrier to implementing the NHS Long Term Plan. While accepting that GPs generally supported the current practice ownership model and that it should remain, official backing has deepened towards separating ownership from the delivery of primary medical services, not least as a way to generate modern and more flexible premises, and to pilot alternative premise reimbursement arrangements, including those in multi-practitioner use.
Debenhams Ottaway through its commercial property team will advise on asset management ranging from the grant of leases (whether by landlords or tenants) of GP offices and wider health centre developments, from sub-tenancies and licence agreements, to lease renewals, rent and service charge disputes, and break notices. It has a proven track record in advising clients/GP practices on leases. Our goal is to draft documents and agreements to maximise client benefits and protections – and importantly this includes looking beyond the transaction in hand, but also the future implications to our clients’ businesses.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.