Q. When should a lease be granted?
A. This is a potentially complex area where it is important for practices to take advice from a specialist solicitor and surveyor before proceeding.
Q. The practice premises are still owned by two retired partners of the practice. Should the current partners take a lease?
A. Yes. If there is no proper lease in place then the basis upon which the current partners occupy the premises is uncertain, which could lead to potentially expensive disputes with the property owners.For example, who is responsible for repairing the roof of the property? Who is responsible for maintaining the boiler? In addition, the current partners do not have any certainty that they will be able to use the premises in the longer term.
Q. The practice premises are owned by the three current partners. A new partner is joining the premises, but she will not be a property owner. Should a lease be granted?
A. Ideally new equity partners should take an ownership share of the property. Property arrangements can become more complicated to manage if this is not the case. If this is not agreed for any reason then, from the perspective of the property owning partners, it would be better to put a lease in place, in order to ensure that the arrangements are placed on a proper legal footing. This can also avoid setting a precedent for more partners coming into the partnership in future without signing up to a lease. The lease should be granted by the three property owning partners to themselves and the fourth partner. From the perspective of the incoming partner it is not strictly necessary to take a lease, as the partnership deed will either expressly or by implication give her a licence to use the premises to carry out her responsibilities as a partner. This will be the case even if there’s no partnership deed in place.
Q. Should a lease be granted where the property owners are also the partners in the practice?
A. A lease cannot be granted in these circumstances because the landlord and the tenant are exactly the same people. It is not possible in law to grant a lease to yourself.
Q. Is Stamp duty land tax payable on the grant of a lease?
A. Potentially, yes. The amount payable depends on the term of the lease and the rent. Stamp duty can be significant so it is important to calculate the tax liability early on in the process.
Sam Hopkins is head of the GP Group at Capsticks Solicitors LLP. Capsticks advise GPs and practice managers on a full range of legal issues including all types of GP property development. Click here to find out more and meet the team and register for our upcoming events.