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In a surgery’s sale and leaseback transaction, the freehold or leasehold of the practice premises is sold to an investor and a lease is granted back to the GP partners for them to continue occupying the building and providing medical services. This model has quickly become an option of choice for many GP partnerships.
However, this option is dependent on individual circumstances and the succession plan of the owning partners. The “sale and leaseback” process can help resolve succession planning issues, but for some GPs this translates to a choice between the flexibility and operational freedom of ownership, and the occupational liability of a long leasehold interest which itself can be a succession planning issue. This can lead to a conflict in terms of property ownership and operation.
The 2019 NHS Premises Policy Review noted that property risk, and the perception of risk, is one of the major factors discouraging GPs from becoming partners. The NHS is looking to head towards developing systems that allow GPs to focus on operational considerations through removing considerable occupational/ownership obstacles.
It is against this backdrop that we have recently witnessed a relatively new and innovative shared-ownership model that is seeing considerable uptake and strong support from CCGs.
The model is based on the collaboration between GPs (GP alliances, PCNs or Feds) and a social funder, who collectively form a Property Company (PropCo) that will develop and own a scheme and then lease the whole building to the GP(s). The GP(s) will own the majority share of the PropCo and have full control of the building via the lease. On this basis the GPs will be both landlord and tenant but will benefit from the development expertise and low cost capital provided through the funding partner and with the funder partner taking all the development risk. The GP(s) also are not required to provide any capital or funding guarantees as with other models.
The model also offers a new solution to Sale & Leasebacks, with a sale transaction agreed with the GP / Funder owned PropCo and a single head lease for the whole development agreed with the practice, with all necessary NHS backed sub-leases or licences agreed as required.
The process can include remodelling or extension of existing properties with no capital required. The GPs seeking to remain in practice would therefore become shared owners and lessors.
The shared-ownership model presents the following key material benefits to GPs:
The model demonstrates long term solutions to various key policy issues posed by the NHS Premises Policy Review, including ‘de-risking of property’. Additional advantages are a resolution to ‘last partner standing’ and practices struggling to recruit new partners by using the shared ownership as a mechanism to secure a long-term partnership agreement.
For more information and advice on Sale and Leaseback or the alternative models, please don’t hesitate to get in touch.
Sue Pyatt, Practice Manager
Francis Mulhern, Bretton Medical Practice Peterborough
Dr Adnan Mohammad, GP Partner, Newsome Surgery, Yorkshire
Jill Foster, Practice Manager, Beacon Primary Care, Lancashire