Michael Royden explains why it’s important not to forget about the bricks and mortar when considering a practice sale.

The dental team at Thorntons deals with a broad range of issues for our clients, from queries regarding the sale and acquisition of practices, to disputes between partners, regulatory issues and much more.

Often seen of less importance is the practice premises.

Sometimes the view is that it’s just bricks and mortar, in many cases much less valuable than the goodwill of the practice.

Whilst that may be true, our experience is that lack of attention to the property can cause considerable issues, particularly at key points such as the sale of a practice, or when bringing in new partners, etc.

It therefore pays dividends to ensure that your property arrangements are well organised.

Key issues to consider

Each practice is different, but some of the key problem areas that we encounter are:

  • Works having been done to the premises without the appropriate local authority consents – make sure that you have all the necessary planning permissions and building warrants before doing the works. In turn, with works covered by a building warrant, you need to remember to apply for a completion certificate after the works are carried out – this confirms that the council is happy with the completed project
  • If you extend the surgery at any time utilising a building that previously had a different use – for example into a neighbouring office or residential property, bear in mind that you will need planning permission for change of use
  • If you own your premises, make sure that the title deeds are kept up to date as the practice evolves. This is particularly important in a partnership where partners come and go over time. We regularly see title deeds that include the names of long retired partners. Having to track down former partners who have emigrated to a sunnier lifestyle, so that they can sign documents relating to the premises, does nothing for the blood pressure!
  • Alternatively, if you lease your premises, the landlord will have an interest in various steps that you might decide to take in relation to the practice. For example, the landlord will need to consent to any alteration works you decide to carry out, and so you should ensure that you obtain that consent in writing in plenty of time before you want to start the alterations. The lease may also require you to reinstate the property to its original condition at expiry, and so you will need to be prepared for the hassle and cost of having to do maintenance and reinstatement works in the future (this may not be an inexpensive exercise!)
  • One final point that is worth noting is the involvement of a SIPP. Some of our dental clients have transferred their premises into their pension scheme, and this is often very good tax and retirement planning. However, you must bear in mind that the fact that it is your pension scheme does not mean that you entirely control everything that happens with the building. A SIPP is a separate legal entity, usually administered by a pension provider, with a number of regulatory and administrative controls which go with that. So if you are planning to sell your practice, make alterations, etc, make sure that you approach the SIPP administrators as early as possible so that they have time to deal your requests.

For more information visit www.thorntons-law.co.uk.