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Documenting third-party rent

Creating formal arrangements for the occupation of rooms on your premises will prevent disputes later.

Documenting the occupation of rooms in your practice premises ensures the rights and obligations of both parties are discussed and agreed, and set out in writing.  The written agreement you produce should identify the space to be occupied, any rent or licence fee, any services to be provided, the rules and regulations as to use, the period of occupation and the basis upon which the agreement can be terminated.

Picking the right agreement

The most common ways to document occupation are by using a licence to occupy or a lease.

• A licence to occupy is a less formal arrangement and grants a personal right for the licensee to use the property. It does not grant a legal interest in the property that can be transferred to someone else, and is suitable for occasional or short-term use of space and where flexibility is required. The licence may be for a fixed period of time or could run until terminated, and will often reserve the right for the practice to relocate the licensee to another room. A licence to occupy would be appropriate either for arrangements of less than six months or flexible arrangements – for instance, non-GP clinics – where rooms are used on certain days at certain times. Examples of the kind of third parties who would benefit from a licence to occupy include occupational health visitors, midwives, district nurses and osteopaths.

•Where space is occupied exclusively for more than six months, a lease would be more appropriate. A lease grants a legal interest in the space occupied for a certain period of time and at an agreed rent. It can also be transferred to someone else, subject to the landlord's consent. The tenant would usually be expected to take on more responsibility for the property and make a financial contribution towards repair, maintenance, cleaning and insurance. A lease would be appropriate where rooms are used for a longer term and for permanent arrangements where nobody else uses the area other than the third party. Examples include dentists, pharmacists and the PCT or CCG.

You should also establish a formal notice procedure before the lease is granted, in order to avoid giving tenants ‘security of tenure' over the space.

Rebecca Beardsley is an associate at Veale Wasbrough Vizards

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