When it comes to renting premises, dentists, doctors, GPs and others working in the medical field, have particular needs that are very different from your usual commercial tenant of, say, an office.
Each time I advise a client looking to take on a lease of a surgery the following issues are invariably an important part of the negotiations.
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Planning Consent – Change of Use
The Council won’t let you set up a surgery in any building, such as a disused office space. You’ve got to get planning consent first. This will probably mean getting permission for providing medical or health services under use class D1. So, before going much further, you’d do well to get in touch with the Local Authority’s planning officer to discuss your chances of success.
It is usually essential to ensure that you obtain planning consent for change of use before entering into a lease for a surgery. Obviously, you don’t want to find yourself bound to pay rent for premises that you wanted to use as a surgery but you can only use as an office.
Consent for Works
Invariably, those who take leases of surgeries need to carry out fit out works to the Property. Typical works might include installing access ramps and railings and/or disability lifts, or installing sinks and special plants in individual surgeries. Even if the premises have already been used as a surgery, the chances are that further work will be needed to make the premises suitable for your needs. Planning consent for the works may well be needed, especially if the works are going to affect the exterior appearance or structure of the building.
Whether or not planning permission is needed, you will probably also need to get the Landlord’s consent to the proposed works. It is important that this is done, if possible, before you sign the lease as the Landlord could be difficult about granting consent after the lease has been completed and may ask for additional fees towards his professionals’ costs for providing the approval.
Licences to Other Health Workers
If you’re finding it difficult to build up a list of patients quickly or if, at some point during the lease, the number of patients starts dropping off, it can sometimes be extremely useful to have the option of renting out individual rooms to other health workers. For example, a freelance physiotherapist may be interested in using one of your rooms for a couple of hours a week. This can help your cash flow tremendously during difficult times or simply be a nice extra earner. In order to be able to do this you need to make sure the lease expressly provides for this. It is best to agree this is principal early on in the negotiations with the landlord.
Security of Tenure
Often, those who set up surgeries are looking to become an established and well known part of the community. Remember that it can take several years to build up a good base of patients from the area, and you may well feel uneasy if the Landlord has the absolute right to evict you at the end of the lease. You might then have to start from scratch elsewhere.
If this is important to you, then you will need to make it clear to the Landlord at an early stage of the negotiations that you want the lease to be protected under the provisions of Landlord and Tenant Act 1954. If you have a protected lease then, at the end of your lease, you will have the right to demand a new lease and the landlord will have limited grounds on which he could refuse.
Option to Purchase the Freehold
More often than not, I’ve found that those looking to take leases of surgeries would like the option to be able to purchase the freehold, if business turns out well in the new premises. Sometimes they want the option to purchase simply so they can have more time to get the money together to do so.
If you are looking for the option to buy the freehold you need to get the landlord on board early on. In particular you will need to decide on important issues such as the option period (ie how long do you get to decide if you want to buy the property) and the price at which the landlord has to sell the property to you should you exercise your option. Option agreements can raise tricky issues, so be sure to get legal advice here.
Keep in mind that these are only a selection of some important issues that I have found crop up more often than not when negotiating the terms of a lease of a surgery. All the usual tricks and traps of taking on commercial leases will normally apply here as well. So, if you’re not used to the process make sure you get some proper legal advice.
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