Trends in dental surgery premises
NHS Property Services Limited
For many primary care providers including a number of dentists, the landlord of their surgery was their local PCT (Primary Care Trust). When PCTs ceased to exist in April 2013, operational primary care properties, including dental surgeries, GP (general practitioner) surgeries, pharmacies and ophthalmic surgeries were transferred to NHS Property Services Limited (NHS PS), a new company owned by the Department of Health. NHS PS was tasked to deliver cost effective property solutions for community health services along with value for money. Fitness for purpose is also a key consideration for the Department of Health and CQC (Care Quality Commission) inspections have driven this. The move of PCTs’ property interests to a new body has prompted the formalisation of the contractual position between NHS PS and dental practices where clear contracts did not previously exist. The advent of a more arm’s length relationship between the parties has meant dentists must build a relationship with their new contacts at NHS PS.
The transfer of PCT primary care premises to NHS PS does not directly affect dentists who own their own premises. Similarly, dentists in leased premises whose landlord was not a PCT are only affected if a PCT was a superior landlord of their premises (that is, a landlord to the dentist’s own landlord or ‘higher up the tree’).
CQC inspections send shivers up the spine of all primary care providers. However, a pleasing 96% of 13,000 plus dental practices inspected so far have met all the required standards. A beneficial effect of inspections is that they prompt compliance of statutory and other obligations that are placed on dentists. Obligations include compliance with disability discrimination legislation to ensure that disabled patients have proper access to patient services at the premises. If any works to the property are required, dentists occupying under leases need to check if they or a landlord are responsible for the cost of compliance – usually it will be the dentist. Dentists also need to check if landlord’s consent, planning consent or building regulations consent is required.
A growing trend in the industry is small practices being bought out by dental chains. Often when this happens, the retiring dentist has not thought through succession planning in detail and, as a result, the retiring dentist pays more tax or achieves a lower net price for the practice. Practices targeted by chains often have no internal successors for retiring dentists to sell their practice to. The ‘chain’ practices have experience in structuring deals and are experienced in arranging finance to close deals. Dentists thinking of retiring or selling should take practical steps now to ensure that when they come to sell they maximise their negotiating position and the value of their business:
- Start planning at least three years, and preferably five years, before you are ready to retire
- Talk to your accountant early to put in place a plan to minimise your tax liability when you come to sell
- Review your business structure – should you operate as a partnership or a company?
- Ensure that the assets of your practice are owned by the appropriate person
- Make sure you have clearly and formally documented contracts, including employment contracts for your staff
- Think about how to maximise the value of your property, for example if you own the freehold you could retain the freehold and negotiate a lease to the buyer. This could provide a valuable regular and relatively safe income during your retirement and ultimately perhaps an asset to pass on to your children. You should seek tax and legal advice and also surveyor’s advice regarding this.
Early planning will not only reduce stress – it will save you money.
Ingrid Saffin is partner and head of commercial property at law firm Mundays. Ingrid deals with a broad range of commercial property matters with particular expertise in landlord and tenant and in dealing with the property aspects of corporate sales, acquisitions and mergers. Ingrid is also a member of Mundays’ healthcare team.