Maximise the price of your surgery. As more doctors are looking towards retiring, some earlier than anticipated due to the consequences of the pandemic, many GP partners are considering a sale & leaseback arrangement to allow themselves more mobility and flexibility with their finances.
The common concern surrounding sale & leaseback transactions is whether the GP partners will get the best price for the property they own. Similarly, any potential purchaser will be insistent that any risk surrounding the purchase of a property is minimised.
See our tips and advice below to secure the best possible value for your property:
1. Notional Rent
Typically, the first thing valuers will consider when valuing a property is the rental income, for most practices this comes in the form of a notional rent, distributed by NHS England. Review the notional rent every three years on a hypothetical lease basis, it is the practice’s responsibility to trigger the rent review from the local CCG and provide necessary documents to request the District Valuer’s updated opinion of the rent. This process is made significantly easier by instructing an independent specialist healthcare surveyor to advise and negotiate the review.
Experienced healthcare surveyors will be able to assist with the preparation of the documents to trigger the rent review as well as negotiate with the District Valuer on their opinion of rent. It is important to remember that the proposal from the District Valuer Service is their opinion only and there is usually further flexibility within this figure as well as the potential for inaccuracies within the assessment. It is therefore important to seek independent advice from specialists such as Aitchison Raffety in relation to the proposal when it is received to see if an appeal is worthwhile. Carrying out regular rent reviews is seen as a positive factor by potential purchasers and will maximise the sale price of a property.
2. Third party occupiers
Practices throughout the UK frequently sublet their available space to third party occupiers to generate additional income, this can come in the form of physiotherapists, district nurses, dentists, or pharmacists among others. Typically, there will be a lease in place for any underlet areas, however if this is not the case then it is essential that this is agreed, reflecting appropriate terms and rents with the advice of specialist healthcare surveyors. Aitchison Raffety are experienced in the process of agreed terms and putting a lease in place, which has a positive effect on the desirability of a property and can significantly increase the value of the premises. If a lease is already in place, then it is prudent to trigger the relevant reviews to ensure you are maximising the rent and therefore maximising the price potential of your property.
3. State of repair of the building
When considering the purchase of a premises of investment, purchasers will consider the condition of the property as a priority. This will be both in terms of the internal specification of the premises as well as the condition of the fabric of the building itself. NHS England provide guidance in relation to infection control and building standards which indicate what the expectations are for a property providing primary care services.
Ensuring this guidance is followed will help to maximise the value of the property, as well as making it easier for the practice to provide said services. Exceptions are typically made in respect of the guidance for older converted properties as they often do not have the facilities to meet NHS England’s guidelines. With regards to the fabric of the building the advice of a building surveyor may be required as to any necessary works or repairs that may be expected prior to sale. Aitchison Raffety can advise on this and provide a Schedule of Condition in relation to the premises and assist in building in reasonable time frames into any new lease for these works to be undertaken.
4. Appropriate documentation
When a partner sells their share of the premises to the Practice rather than to an external investor/purchaser, or when allowing another partner to buy in, it is essential that a Partnership Deed is in place which clearly indicates how the property is to be valued. The lack of a Partnership Deed will result in confusion and possible conflict between partners when the time to sell arrives. When putting this document in place it is essential that factors such as how the property is to be valued and how a valuer should be appointed are considered. In doing so, this will maximise the potential value of the property as well as avoiding potential conflict when the time to sell arrives.
5. A competent Valuer
Instruct an experienced valuer to value the property. A surveyor with experience in the Primary Care Industry such as Aitchison Raffety is the most competent individual to carry out this instruction and ensures that the correct valuation is applied to a building, as well as being able to properly advise on any issues arising as a result.
This reduces the risk from an investor perspective and increases the likelihood of a successful sale. Aitchison Raffety have more than forty years’ experience in the surveying industry and undertake valuations for partnerships, secured lending valuations for major lending companies and portfolio valuations for large investment companies.
We have successfully provided hundreds of valuations for clients across the UK and have had great success advising on and resolving issues surrounding getting the maximum price for a healthcare premises.