For young GP’s with personal commitments in respect of the home mortgage and school fees, the prospect of “buying into” the surgery premises does not often appear attractive even if it does represent a good investment. Existing owners must accept that they cannot force a new young GP partner to “buy in”. So what are the alternatives?
1) A retiring partner could retain ownership of the surgery premises. This is not an ideal arrangement, and this partner could find that the rate of Capital Gains Taxes rises from 10% to 28% on eventual disposal.
2) The continuing partners could acquire the outgoing partner’s share leaving the new partner as a non-property owner. This approach needs managing as we could be left with a “last man standing” scenario.
3) The new partner takes out a personal loan to buy in, but this may lead him or her over committed on a personal basis.
4) The practice takes out a new loan to pay out the retiring partner the responsibility of which rests with the incoming partner. This could work but care must be taken as to the legal status of this
5) The practice takes out a new equity release loan to release the equity immediately for all of the property owners. This approach has many attractions but care must be taken over the value placed on the premises, and the comparison of notional rent with loan re payments must be a major consideration.
There are many ways to approach this issue; our specialist team is available to provide help and guidance for all of the partners involved.