One of the greatest challenges for the NHS is the condition of its property stock and its fitness for purpose.
As the NHS in Scotland tries to meets it 2020 Vision those challenges continue to present significant difficulties. Even where the NHS is proactive in developing new surgery premises often legacy buildings remain which are not even in the control or ownership of the NHS, health boards or other public sector stakeholders.
The risks and liabilities which surround such legacy buildings are substantial.
In primary care it is often General Practitioners who are left in the forefront of such risks and liabilities. If the doctors own their buildings they may have substantial bank borrowings which are sustainable only so long as the Rent and Rates Reimbursement Scheme applies. If they lease their buildings they may have significant dilapidations and repair liabilities.
For GP’s such risks are a real and present danger to practices and partner profitability.
In recent years ownership of new practice premises has tended to be the preserve of institutional investors and of course HubCo schemes currently dominate surgery new-build. When the General Practice Finance Corporation disposed of its surgery portfolio in the early 2000’s it was an institutional investor, GPG Group, which purchased the properties. Even had individual practices wanted to they would have struggled to buy their premises. There are many other investor-owners of GP surgeries.
Of course, at some point current investors will look to cash in on their investment. If a practice get the opportunity to purchase such premises it should consider carefully whether to do so. Some key considerations are:-
1. The value of the premises as against what the vendor is looking for by way of a sale price.
2. Whether and to what extent a bank will lend against the value of the property.
3. The level of rent and rates reimbursement available from the health board.
4. How many partners want to buy the building.
5. The health board’s intentions for the delivery of primary care in the vicinity.
If a practice does decide to purchase their premises then they should consult advisers (i.e. an accountant, lawyer and valuer) experienced in working with medical practices and who understand how GPs are funded by the health board.
The Davidson Chalmers team has extensive experience in advising primary care GPs on a range of premises related issues. For an initial informal conversation please contact me (email@example.com / 0131 625 9191) or any of the Davidson Chalmers partners.