Stay in control and avoid costly last-minute surprises

Premises’ repair, maintenance and dilapidations liabilities are easily overlooked but your obligations can pose significant financial risks, particularly at lease expiry. Rachel Croft and Stephanie Trompeter provide practical steps to help you manage and save money.

GP practices typically occupy surgery premises or health centres under a lease and are often responsible for the full cost of repair and maintenance even where they do not own the building.

In most cases, the lease for what is one of your most valuable and costly assets will be held by GP partners or a company, who bear liability for compliance.

If your obligations are unmet then the landlord may bring a claim for dilapidations – damages for breach of lease covenants relating to the state and condition of the premises – usually at or shortly after lease expiry.

So it is important to understand the extent of your repairing obligations as early as possible. Here are five practical steps to help you plan ahead and limit your exposure to claims.

1. Plan ahead

Well in advance of lease expiry, review the tenant obligations about the condition in which the premises must be returned. These typically include obligations as to repair, decoration and reinstatement.

Key questions to consider include:

• Are you required to keep the premises in ‘good repair’, or only in no worse condition than evidenced by a schedule of condition?
• What statutory compliance obligations apply, for example, fire safety, gas and electrical safety, and water hygiene?
• Have you carried out alterations which may need to be removed at the lease-end, such as accessibility adaptations or internal reconfigurations?

You should also locate all documents supplemental to the lease, such as licences for alterations, deed of variation and any schedule of condition. A schedule of condition can significantly reduce dilapidations liability but is often difficult to locate many years after completion, weakening your negotiating position.

2. Seek early input if you plan to do the work

Consider instructing a chartered building surveyor to advise on the works required to comply with your lease obligations at term-end. Carrying out works requires time and planning.

You will need to allow time to procure contractors, obtain quotes and complete the works before lease expiry.

Doing the works gives you greater control over cost and quality. But there is a risk you do things the landlord would not ultimately have required, or which do not materially affect the level of a dilapidations claim.

The alternative approach is to wait until lease expiry and respond to a terminal schedule of dilapidations. In that scenario, you are no longer doing physical works to the premises but engaging in a financial negotiation to settle the landlord’s claim for damages.

This shifts the focus from carrying out repairs to assessing the validity, scope and value of the landlord’s claim, often with the benefit of legal and valuation arguments.

This distinction is important because a landlord’s claim is ultimately limited, by statute, to the diminution in value of its interest in the property, which may be significantly less than the cost of carrying out the works.

3. Budget for repairs

Practices should ideally set aside funds on an ongoing basis throughout the lease term to meet repair obligations. This helps spread the financial burden and avoids a large, unexpected liability at lease expiry.

Financial planning should begin at least one year before lease expiry. Without adequate preparation, practices – particularly partner-led practices – may face substantial and potentially unaffordable liabilities at lease end.

Note that agreeing a new lease of the same premises, whether by renewal under the Landlord and Tenant Act 1954 or otherwise, does not eliminate existing dilapidations liability.

That liability is instead typically deferred and may continue to accrue, ultimately crystallising at the expiry of the new lease. As a result, entering into a renewal lease without addressing the condition of the premises can simply postpone, rather than resolve, the issue.

Where a lease renewal is being negotiated, practices should consider seeking to agree a schedule of condition to be attached to the new lease.

This can limit future repairing obligations by reference to the documented state of the premises at the start of the new term, helping to manage long-term exposure.

4. Seek specialist advice

A terminal schedule of dilapidations is often served shortly before, or after, lease expiry. Once received, it should be reviewed by a specialist solicitor working alongside a chartered building surveyor.

Specialist advice can often significantly reduce the level of a landlord’s claim. Landlords may seek to include:

• Improvements or upgrades rather than repairs, for example the replacement of items not yet beyond economic life
• Items falling outside the tenant’s legal obligations, and
• Inflated costs or claims which do not reflect the landlord’s actual loss.

It is also important to consider valuation evidence. In some cases the diminution in value of the landlord’s interest may be significantly lower than the cost of the works, and the claim may be reduced substantially, potentially to nil.

Practices should also consider if any liability can be passed on to third parties, such as undertenants or occupiers.

5. Find out the landlord’s intentions

The landlord’s intentions for the premises after lease expiry are highly relevant to the value of any dilapidations claim.

For example, if the landlord intends to redevelop the property, carry out substantial refurbishment, or grant a new lease to a third party, then the value of its claim may be significantly reduced.

Practices should monitor planning applications, review any notices served and, where appropriate, make inquiries through local agents.

It may be possible to negotiate an early settlement with the landlord. A pragmatic and collaborative approach can help crystallise liability sooner and reduce ongoing professional costs. But be cautious and take legal advice to avoid the risk of overpayment.

Some other key lease considerations for GP practices

Be aware of other important landlord and tenant issues. These include:

• rent review provisions, which may lead to significant increases in rent over time
• service charge obligations, particularly in multioccupied health centres where costs can be substantial and difficult to challenge
• restrictions on assignment or underletting, which may limit flexibility if the practice structure changes, and
• break clauses, which may contain strict conditions to be operative.

Practices should review alienation and sharing provisions carefully, especially in light of PCN arrangements and the increasing use of space by third-party clinicians.

And do not forget security of tenure under the Landlord and Tenant Act 1954, because it affects your renewal rights and negotiating position at lease-end.

First published in AISMA’s Summer 2026 edition. 

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