Last of the GP property owning partners – how to manage a tricky transition
The relationship between GP partnership and property interests can create complex scenarios, particularly when new partners do not wish to buy into partnership owned surgery premises. This has become increasingly common as new partners are sometimes put off taking on mortgage debt and agreeing long term commitments, notwithstanding notional rent funding and the potential to build up equity over time.
Chickens often come home to roost when the last property owning partner retires from a partnership. What rights then will the partnership have to continue using the surgery? Given this is a business critical risk, it is surprising how many partnerships do not properly plan for and have arrangements in place to deal with this succession issue.
Ownership within the partnerships
It is important to recognise that, a partnership is not a separate legal entity distinct from its partners. The partnership is a relationship between the current partners and, whilst one or more partners are owners of the surgery, it can be treated as a partnership asset with the non-owning partners permitted to use it for partnership business.
Retirement of the last property owning partner
This all changes when the last property owning partner retires in circumstance where the continuing partners are not taking on the property ownership. Several key steps and considerations will then arise:
- Ownership and occupation: upon retirement, the outgoing partner ceases to be an owner occupier of the surgery and so the continuing partnership potentially have no rights to continuing use it. The continuing partners will need to negotiate occupation rights, usually via a lease.
- Sale and leaseback: if the outgoing partner wishes to sell their property interest, which may be important in terms of tax reliefs (e.g. for CGT), they may consider doing so to a property investor who, will hopefully, then lease the surgery back to the partnership.
- Agreeing terms: the outgoing partners/purchaser and the new partnership should agree the terms of any new lease, covering rent, duration, repair obligations and other points. This should be done with assistance from specialist medical surveyors and solicitors.
- Obtaining approvals: if the property is mortgaged, lender consent may be required. The lease must also be approved by the ICB for lease rent reimbursement rather than notional rent. Stamp duty land tax should also be considered.
- Timings: the above steps can take some time to complete. Given partners often retire on as little as 6 months’ notice, it may already be too late to start planning when the notice lands. Ideally partnerships should be planning for this at least 18 months in advance but ideally earlier.
The retirement of the last property owning partner can present challenges. Unfortunately, we see far too many examples of partnerships sleepwalking into disputes in these circumstances which not only sours relationships but results in much stress and cost. To avoid this and to aid an orderly transition, it is prudent to agree documents and arrangements to safeguard everyone’s interests. Careful legal drafting and a clear understanding of the respective rights and obligations should ensure continuity of medical services for patients and security for the partnership and help retiring partners to exit well whilst protecting their financial affairs.
First published in GP Business in December 2025