26/11/2019 – The Importance of a GP Premises Partnership Valuation

For GP partners who own their surgery, either on a freehold or long leasehold basis, it will almost certainly be their most valuable asset and a long term investment. There are many reasons why a GP Premises Partnership Valuation may be required; for example if there is a partnership change, acquisition or disposal, setting up a new lease or amending an existing one, raising finance, extending or refurbishing all or part of the property, or simply to understand the current value of the property.

The valuation will take into account any Partnership Deed in place. Some of these have specific instructions as to how a property should be valued, for example in continued use as a doctors surgery, whereas others may be completely silent on the matter, in which case it would usually be appropriate to adopt Market Value which may also consider potential alternate uses for the property. In some instances the Deed may require two separate valuations, alternatively it may allow the partners to jointly appoint a single valuer.

It is surprising how many GPs rely on a historic valuation within their accounts and in some cases have not had the premises valued since the original purchase. By contrast other GPs have valuations undertaken on a fairly regular basis, particularly where there are a large number of property owning GPs, with the partnership frequently changing hands. With regular valuations there are much fewer surprises, either pleasant or unpleasant, as the Practice is more likely to have an up to date and accurate understanding of the value of the premises and fluctuations in value over the period of ownership. It is not uncommon for an outgoing partner to consider that the premises are considerably more valuable than the remaining partners do and by having an up to date valuation this can avoid unnecessary friction within the partnership and allow for proper budgeting.

It is easy to underestimate the importance of an up to date valuation of your practice premises as well as the contents of the report itself. As well as providing the Practice with the Market Value of the property, a good valuation report will also highlight any issues in terms of rental income either in relation to notional rent reimbursement (CMR) or from any occupational leases such as pharmacy or dentist and whether the rental levels are in line with market expectations. It will also consider any risks in terms of any associated leases or income and ways in which ways in which you can maximise the value of your property asset. The valuation of GP premises is a very specialist area and we would therefore highly recommend the use of a specialist valuer such as Aitchison Raffety who can not only provide the valuation service but also assist with any issues that may arise as a result.

To request a valuation of your surgery, please contact Paula Mace, Director of Healthcare at Aitchison Raffety on 01727 844 555 or via email to healthcare@argroup.co.uk.