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If your surgery lease is up for renewal, new rules give tenants more power. Solicitor Daphne Robertson advises
If your surgery lease is due to expire, whether you are a GP landlord who has granted a lease to another party or a GP tenant renting your premises, you will need to consider the new rent.
The Landlord and Tenant Act 1954 offers ‘protection' to a GP tenant in the sense that it gives the GP tenant a right to renew the lease on substantially the same terms as the previous lease.
Without the protection of the Landlord and Tenant Act 1954 a GP tenant has no automatic right to renew the lease at all. However, this protection does not necessarily apply to the rent under the new lease.
The rent paid at the end of the lease term will cease completely and a new rent must be agreed or, in the absence of agreement, the rent will need to be fixed by the court. Generally long surgery leases are not protected under the Act. This article therefore considers the shorter leases that do offer a right to renew.
The question is, when does the old rent cease and the new rent commence?
At first glance it seems obvious that the new rent commences on the start date of the new lease. But this is not necessarily the case.
The old law
Before 1 June 2004 only landlords could apply for a new lease when a lease was due to expire and so landlords could manipulate the date that the new rent would commence from. If market rents were falling, the landlord could delay applying for a new lease and would do so in order to delay the start of the new rent.
The tenant would then have to carry on as if the old lease terms were still current, including the old rent. If market rents were increasing, the landlord could move quickly for the new lease to be finalised to take advantage of this upward trend in rents.
The earliest time to apply for a new lease is 12 months before the expiry of the old lease. This is a good time to consult your solicitor as the procedure is complex. Further, it would be advisable to take professional advice on the rental market from a local surveyor or estate agent.
The PCT's district valuer can be very helpful here, particularly since as a tenant you want to link the rent review into the district valuer's three-yearly PCT rent assessment.
The new law
After 1 June 2004 the law changed to allow either the GP landlord or the GP tenant to apply for a new lease. This has changed the tactics previously utilised by GP land-
lords, because if a landlord delays he will find his tenant making the application for renewal.
Furthermore the process is cheaper as it is not necessary to apply to the county court and incur the costs of doing so if an adjournment of the timetable can be agreed between the landlord and the tenant.
So when market rents are increasing, the GP tenant can take the initiative and apply for a new lease, thereby pegging the new rent below a level that could have been achieved if the landlord had chosen to delay entry into a new lease.
In the course of the tenant's application he can apply to the court for an interim rent to be fixed.
You can make an application to renew your lease as early as 12 months before the lease is due to expire.
Certainly 12 months before the end of
the lease term, you would be wise to check on comparable market rents and have a word with your solicitor to decide your
Sometimes a lease provides for a rent review on the last day of the lease term.
This is known as an ‘11th hour' rent
review and may catch a GP tenant who is delaying entry into a new lease in order to avoid an increased rent in a rising rental market and waiting for new terms to be agreed.
Clearly this is not an issue for those GP landlords or tenants whose rent is linked to the level of the PCT's rent reimbursement.
Daphne Robertson is the founding principal of
DR Solicitors, specialist advisers to NHS Doctors‘In a rising market take the initiative to peg the rent'