General practice has recently seen a surge in early retirements and with the proportion of GP partners aged over 55 rising above 30% for the first time, this trend is set to continue. With many practices undertaking partnership change or set to, GP Surveyors examines why a property valuation is needed and the benefits of instructing a healthcare valuation specialist.
GP premises Market Valuations
The process of a property-owning partner leaving can be quite straight forward, if existing or new partners wish to buy out the departing partners share in the property. In such a scenario the practice simply needs to instruct specialist healthcare surveyors to carry out a market valuation, to ascertain the current value of the practice premises.
Why instruct a specialist healthcare surveyor?
Instructing specialist surveyors to carry out a market valuation of the practice property is essential as the basis of valuing a GP surgery is different from the valuation of other commercial premises. A healthcare surveyor would commonly value the surgeries’ property based on the practice’s rental income stream (e.g. Notional Rent). Comparable evidence of similar GP practice rental income in the given area is also key to a surveyor producing an accurate market valuation. A firm of experienced healthcare surveyors should have access to a significant amount of up-to-date comparable evidence, which will enable them to produce a reliable market valuation of a practice.
Avoiding GP premises valuation disputes
Valuation disputes are uncommon but have been known to happen during partnership change, with the departing partner wishing the valuation to be higher and those buying in wanting it to be lower.
Claire Kersey (GP Surveyors, Senior Surveyor):
“GP Surveyors have been involved in a case where we valued the practice premise over £1 million and a commercial surveyor valued the premises significantly lower. We were acting for the departing partner and a commercial surveyor for the remaining practice partners. Unfortunately on this occasion the case ended up in court. The outcome being that GP Surveyors valuation stood, due to the comparable evidence used to establish the valuation.”
Instructing an experienced firm of healthcare surveyors will ensure all parties have full confidence that an accurate and reliable market valuation of the surgery has been reached, based on market evidence. The buy-out can then proceed at a fair and reasonable price for all parties.
The valuation process
Clare Kersey (GP Surveyors, Senior Surveyor – MRICS, RICS Registered Valuer) explains the Market Valuation process:
“Having received a client instruction, I arrange a visit to the surgery, carry out a full survey of the premises and undertake what is known as a ‘Red Book’ Royal Institute of Chartered Surveyors (RICS) valuation of the premises. Drawing upon GP Surveyors’ wealth of comparable GP property evidence and my experience, I then produce a written report for the practice, detailing the value of the property and my reasoning.”
When a property-owning partner retires, practices should consider whether:
- The practice requires a lease to be put in place?
- The Sale and Leaseback or Sale and Transfer of the surgery could help alleviate future succession issues?
For the answers to these questions and further advice see our article, GP property and planning for partners retirement.