Professional environments for private healthcare and medical practices—available UK-wide through Fraser Bond.
Maida Vale, Greater London
Stanford-le-Hope, Essex
Primary care property is unusual because the occupier does not really pay the rent. It is reimbursed by the NHS, reviewed on a defined cycle against an independently assessed current market rental value. That makes the income unusually predictable and unusually dependent on something other than the tenant’s trade. And where the healthcare use ends, the way out is wider than most buyers assume: medical use sits in Class E, so a former surgery can become an office, a nursery, a gym or a clinic of another kind with no planning application at all.
On a primary care asset the occupier’s rent is reimbursed by the NHS against an independently assessed current market rental value, reviewed on a three-year cycle. That is a different income profile from a commercial letting, and it is underwritten by something other than the practice’s own trading.
Reimbursement follows the contract, not the building. If a practice hands back or merges into a larger site, the mechanism that supported the rent goes with it. We look at the covenant, the contract position and the catchment before we look at the yield.
Medical use sits in Class E, so a former surgery can move to office, retail, nursery, gym or clinic use with no planning application. Residential conversion runs through Class MA and needs two years of continuous Class E use. The route out is usually wider than the particulars suggest.
Our fee is paid by the vendor. No acquisition fee and no retainer — and no reason for us to present a reimbursement position more favourably than the documents support.
Let and reimbursed income, a vacant asset to reposition, or a site where the value is the land rather than the building. These are three different risk profiles and the diligence for each is different.
The reimbursement basis and its last review date, the occupier and their contract position, lease terms where there is a lease, condition and backlog maintenance, lawful use class, and the realistic alternative use.
Where the healthcare use is ending or already gone, what the building can lawfully become and what it costs to get there is the whole valuation. We model it rather than describing it as potential.
Where GPs own their premises, the NHS reimburses a notional rent based on the current market rental value of the property, assessed by a surveyor on notional lease terms — conventionally a fifteen-year term with defined repairing obligations. Where the practice has borrowed to buy or build, borrowing cost reimbursement applies instead, and once the loan is repaid the practice moves onto notional rent.
The reimbursement is reviewed on a three-year cycle, or sooner if the use of the premises changes or capital investment is made. Under the Premises Costs Directions 2024, NHS England or the integrated care board may appoint a valuer of their choosing rather than being confined to the District Valuer, and a practice served with a proposed rent letter now has a 12-week deadline to respond — a change that catches out occupiers and, by extension, landlords relying on the review.
A primary care asset looks like a long income play with a public sector underpin, and to a degree it is. But the reimbursement attaches to a practice holding an NHS contract. If the practice hands back its contract, merges into a larger site, or the commissioning position changes, the mechanism supporting the rent goes with it — and you are left with a purpose-built building in a location chosen for a catchment rather than for a market.
So the diligence is not really property diligence. It is the age profile and succession position of the partners, whether the practice is a viable list size, whether it sits inside a primary care network pushing toward consolidation on fewer larger sites, and how far it is from the nearest alternative premises. A yield that looks generous on a small surgery is often pricing exactly that risk, and pricing it correctly.
The provision of medical or health services sits in Class E(e). That means a building lawfully used as a surgery, clinic or health centre can change to an office, a shop, a café, a nursery, a gym or another Class E use with no planning application at all. For an asset described as having ‘repositioning potential’, that is usually where the potential actually sits, and it is far more certain than a scheme requiring consent.
Residential conversion is a different route. Class MA permits change from Class E to dwellinghouses subject to prior approval, and requires two years of continuous lawful Class E use immediately beforehand. The 1,500 square metre cap and the three-month vacancy requirement were both removed on 5 March 2024, which widened it considerably. Determination is 56 days, the most common refusal ground is inadequate natural light, and an Article 4 direction removes the right entirely in some areas.
Surplus NHS and local authority buildings frequently come with a maintenance backlog that has been deferred for years, and the vendor’s own condition data is often the most useful document in the pack — ask for any six facet survey or equivalent condition report rather than relying on a walk round. Expect asbestos in anything built before 2000, ageing plant, and services designed for a use you may not be continuing.
Then the ground. Former hospital, clinic and depot sites can carry contamination, and under Part 2A of the Environmental Protection Act 1990 liability pursues whoever caused it first but reaches the current owner or occupier where the original polluter cannot be found. A Phase 1 desk study is inexpensive; the alternative is discovering the position after completion, when you have no leverage at all.
Public sector vendors do not always behave like commercial ones. Disposals are subject to duties about obtaining proper value, decisions can require internal approvals that are not visible to a bidder, and timetables slip for reasons that have nothing to do with the asset. A vendor may also prefer a clean, deliverable sale with overage over the highest headline number from a bidder with a conditional structure.
The NHS reimburses it. Where GPs own their premises they receive notional rent based on the current market rental value assessed by a surveyor on notional lease terms, conventionally a fifteen-year term with defined repairing obligations. Where the practice borrowed to buy or build, borrowing cost reimbursement applies until the loan is repaid, after which they move to notional rent. Reimbursement is reviewed on a three-year cycle, or sooner if the use changes or capital investment is made.
It generally goes with them, which is the central risk in primary care property and the reason yields on small surgeries can look generous. Reimbursement attaches to a practice holding an NHS contract, not to the building. If the practice hands back its contract, merges into a larger site under a primary care network, or the commissioning position changes, the mechanism supporting the rent stops — leaving a purpose-built building in a location chosen for catchment rather than for market. Diligence here is about partner succession, list size and network strategy more than about the property.
More easily than most buyers assume. Medical use sits in Class E, so a former surgery can become an office, shop, café, nursery, gym or another Class E use with no planning application at all. Residential conversion runs through Class MA, which needs two years of continuous lawful Class E use and prior approval — and the 1,500 square metre cap and three-month vacancy requirement were both removed on 5 March 2024. The practical caution is that many former health buildings are single-storey and deep-plan, and inadequate natural light is the most common Class MA refusal ground.
Assume a deferred maintenance backlog and ask for the vendor's own condition data — a six facet survey or equivalent is usually the most useful document in the pack. Expect asbestos in anything built before 2000, ageing plant, and services designed for a use you may not continue. On former hospital, clinic and depot sites, also run a Phase 1 desk study for contamination, because under Part 2A liability reaches the current owner where the original polluter cannot be found. All of that is cheaper to establish before exchange than after.
On certainty as much as on price. Public vendors are subject to duties about obtaining proper value and to internal approval processes a bidder cannot see, and they frequently prefer a clean, deliverable sale with overage to the highest headline number from a conditional bidder. An unconditional offer with a sensible overage structure regularly beats a higher subject-to-planning bid. It is one of the few markets where being straightforward is a competitive advantage rather than a negotiating weakness.
