Why GPs considering retirement and their practices should plan in advance.
When a property-owning GP partner is planning retirement, you may be surprised to hear that they should ideally start the process years before their planned retirement date. Taking the time to plan early can make retirement a less stressful and more straightforward process for the individual and the practice.
When planning retirement, it is important to consider the following areas from a property perspective:
Whenever a partner decides is the right time to sell their share in the premises, the practice will need to ensure that an accurate Market Valuation from a surveyor who specialises in valuing GP surgeries.
This is important because the valuation of a GP surgery is different from the valuation of other commercial premises. The firm of surveyors must have access to a significant number of comparable GP premises valuations in order to arrive at a fair price.
There are many GP practices currently exploring Sale and Leaseback as an option for easing retirement and recruitment issues.
By selling the surgery premises to an investor and then leasing it back from them, a partner can retire immediately or at a later date without the complications of selling their share. Moreover, recruiting new partners becomes easier as they no longer need to raise significant funds to buy into the practice.
A standard GP practice lease would normally be 15 years, providing a partner with the option of seeing out the full duration of the lease or taking retirement a number of years beforehand. Leaving a shorter time on the lease for new partners to commit to, thus making it easier to find a replacement.
There is also more flexibility when the lease comes to an end. The current partners have the option to sign up to a new lease for the existing premises or consider a move to a more suitable building.
If a partner is selling their share to another GP who will become a property-owning partner, a solicitor should be consulted and preferably a primary care specialist. The practice should discuss amending the partnership agreement, updating the title deeds for the premises, the land registry information and the ‘Declaration of Trust’*, etc. Moreover, it is important for the departing partner to speak to their mortgage company about releasing them from the mortgage.
If a practice is entering into a Sale and Leaseback agreement, their solicitor should add a clause to the lease which automatically amends the partnership agreement depending on current lease signatories.
Other Things to Consider for retiring partners
- accountant from the outset – due to the potential tax implications of selling the premises
- pension provider who may take some time to enable your payments.
- the CQC (your Local Area Team)
- NHS England (so they can update the GMS/PMS contract)
- your bank, insurance company and HMRC among others.
This is by no means meant as an exhaustive guide. We recommend that as a GP considering retirement you should speak to all of the aforementioned professionals to create your retirement plan.
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* Property is held by one person in their sole name, but it has been bought for two people as their joint property to live in and both pay the mortgage jointly. The ‘Declaration of Trust’ will then ensure that the property proceeds would be divided equally between the parties upon sale.