Ask The Experts - Legal Property Responsibility

Published: 21/03/2008

Question

The 15 year lease on our surgery has recently expired and we are negotiating renewal with the landlords – both former partners. Associated costs are over £11,000; legal costs £3,500; dilapidation survey £1,150; stamp duty land tax (SDLT) £6,560; and land registration fee £420. Can you advise on the normal arrangement for apportionment of these fees? Should the landlords draw up the lease? Who should be responsible for external and internal maintenance of the premises?

Answer

Under schedule 2 of the NHS (GMS Premises Costs) Directions 2004, it notes that notional rent will be assessed assuming the following lease terms:

A term of 15 years with upward only rent reviews; assuming that the tenant undertakes to the bear cost of internal repairs and decoration and the landlord undertakes to bear the cost of insuring the building and of carrying out external repairs and maintenance; there is no service charge; that the rent is exclusive of rates; that the tenant has the right to assign or sub-let the whole of the premises subject to the landlord's consent which will not be unreasonably withheld; that the lease allows the premises to be used for practice purposes and for any other purpose which planning permission has been granted or might reasonable be expected.

So, while there is no actual point of law or contract noting that the practice should be responsible for internal repair and decoration, it is certainly inferred as it has clearly been assumed when calculating the notional rent that the property owning partners will receive.

The NHS recommend that doctors take leases where they are only responsible for internal repair, but they do not stop leases where doctors are responsible for full repairing liability and, in the market, there are a number of both style leases. In relation to lease renewal, if matters ended up in the Courts because parties could not agree, then traditionally the Courts would follow the previous lease. Thus, if you have a Full Repairing Lease now, one would normally expect to renew on a similar basis. On the matter of dilapidations, this will apply of course to the lease that has, or is about to end rather than any new lease and the works that a landlord can require to be done (and therefore in respect of which professional charges you may be able to pass on to the tenant) can only relate to the tenant’s liability. .