Ask The Experts - GP Landlords

Published:11/01/2008

Question

My wife and I are GP partners and our surgery was built in 1990 under the cost rent (now borrowing costs) scheme. The cost rent is £26,900 a year and at the last triennial rent review the district valuer (DV) advised that if we switched to notional rent, we would receive only £19,000 a year. Naturally we stayed on cost rent. When we retire and our successor partners take over the practice, my wife and I will no longer qualify for cost rent, but could we continue to be their landlords with them handing over the notional rent to us? What would their responsibilities be as tenants?

Answer

If you become your successor's landlords it is reasonable to expect that you would lease the building on a similar basis to the assumed terms used by the DV to calculate notional rent.

These include that the lease is for 15 years with upward-only rent reviews every three years.

It should contain a covenant that the tenant pays for internal repairs and decoration, while the landlord pays for insuring the building and carrying out external repairs and maintenance.

There are also other assumptions. If you received as rent the full £19,000 reimbursement, the tenants should be responsible for all internal elements including carpets, cleaning, central heating, plumbing and so on, with you responsible for the structure and external decoration.

Or you could transfer all the repairs to the tenants on a ‘full repairing and insuring' lease.

With this you should reduce the rent charged by between 5 and 7.5 per cent depending on the age of the building (older premises need more repairs).

As the landlords you would have no liability for repairing or insuring the building.