An in-house pharmacy can provide a convenient facility for patients and useful income stream for the doctors and the pharmacist.

Careful thought needs to be given to the key property issues as failure to deal with them early can often delay matters.

What Consents are Needed?

As well as the usual regulatory consents (including securing the NHS Contract and GPhC consent to the property), there are property consents which may be required to open the pharmacy.

Title Consents

This will depend on whether the doctors own the freehold or leasehold interest in the property.

If the doctors own the freehold interest generally they can do what they like. There may however be restrictive covenants on the doctor's title which could prevent the proposed use of the property or require consents to any building works or alterations.

If the doctors own a leasehold interest then their lease is likely to require the consent of their landlord to allow any subletting of the property and will also contain other restrictions such as whether any alterations to the property can be made.

If the doctors have a mortgage over their freehold or leasehold title then their bank will also need to consent to the transaction.

Planning Consents

If any works are proposed to the exterior of the building planning consent may be required.

If the pharmacy is going to be opened as a retail pharmacy selling retail related products such as shampoos, cosmetics and other retail goods the pharmacist may need a specific planning consent to allow a change of use to permit a retail pharmacy within use Class A1 of the Town and Country Planning (Use Classes) Order 1987 (the "Order").

If the pharmacy is going to service the health centre, and have only a very small amount of retail sales then depending on the existing authorised planning use the pharmacy may be construed as ancillary to the health centre and planning consent may not be required.

Lease Issues

The doctors and pharmacist should agree some of the main lease issues early to avoid wasting time and cost in negotiating lengthy legal documents if some of the key terms haven't been agreed.

These terms can be set out in an initial Heads of Terms document which is not legally binding before solicitors are formally instructed. They will confirm any rent or premium payable for the pharmacy and the length of the lease term.

A pharmacist must also ensure they address other key points. These can include:

  • A right of exclusivity within the health centre building (so no other pharmacy can open);
  • The right to terminate the lease if the doctors relocate
  • The right to renew the pharmacy lease.

Most business leases (including pharmacies) will attract renewal rights under the Landlord and Tenant Act 1954 (the "1954 Act") unless excluded from those rights. Under the 1954 Act the tenant will, at the end of the term, usually have the right to apply to renew the lease on the same terms unless the landlord has grounds under the 1954 Act to oppose renewal.

The pharmacist should also ask for a one off contractual option to renew the lease separate from the 1954 Act rights so that they have a guaranteed one off right to renew the lease as well.

Specialist advice on rent and premium payable should be obtained from a pharmacy surveyor. They will assess this by reference to the patient list size and other conditions for example where the pharmacy is, the local market etc.

Doctors and pharmacists must be careful in negotiating any premium and rent payable to avoid an argument that the doctors are accepting an inducement or being paid for goodwill for the sale of the pharmacy as such arrangements can be unlawful.

Practical Issues

Will the pharmacy be opening at the same time as the health centre? If not, then you need to consider having separate access and services (for example heating, lighting, air conditioning and water) to service the pharmacy and that should be arranged at the outset as part of the planning and other consents process.

There can be a number of property pitfalls in opening a new pharmacy so great care should be taken at an early stage to take specialist legal advice on all of those issues to ensure that terms can be agreed and the pharmacy can open without delay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.