What are the pros and cons of sale and leaseback?

Sale and Leaseback is where a GP surgery is sold to a third party (often an investment company which specialises in the sector) and then leased back to the practice, typically for around 10-20 years.  The practice will continue to occupy the building and provide contracted medical services.

Some of the benefits of sale and leaseback

  • Your lease rent will be fully reimbursed by the NHS.
  • It can reduce the risk and responsibility of property ownership.
  • It removes the burden of ongoing capital investment.
  • It can help attract new GP Partners
  • Having a lease in place will generally create a higher premium for the value of the property than it would if it was owner-occupied.
  • It can assist with improvement works, an extension, or even new developments at your GP premises.
  • In most cases the tenant will have protected rights for a new lease upon expiry of the existing lease.

Some considerations prior to going through the process would be

  • Leases can restrict what tenants do with the surgery.
  • It Places specific obligations on the practice.
  • If the practice were to close or cease operating, the signatories on the lease would still have responsibility under the lease, including rental payments.
  • There may be Early Redemption Penalties for your mortgage provider.
  • You must always have at least 2 signatories on the lease.
  • Potential tax implications of selling the premises and putting a lease in place.

The process would involve having a specialist surveyor value the premises to determine its open market value. Agreeing heads of terms for a new lease and having those approved by the NHS before going to market. Then negotiating with any interested parties.

If you are thinking about going through a sale and leaseback transaction it is essential to seek expert advice and guidance from specialist, surveyors, solicitors, and accountants.

Here at BW Healthcare Surveyors, we have helped and supported over 1,000 GP practices in UK with all their premises related issues.

Should you have any questions or queries in regards to any the above, please don’t hesitate to get in touch with one of our expert advisors on 0114 4420098.

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