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GPs ‘undercharging’ pharmacy rent by a third

20 November 2012

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Practices are ‘losing out’ by more than a third when renting space to pharmacies.

GP Surveyors claim general practices are undercharging pharmacy companies who are paying rent “way below what should be expected”.

In light of this, the company has achieved pharmacy rent increases of 36% per year for GP surgeries in the last three years through renegotiating rent agreements between pharmacies and GP practices.

One GP practice saw a 135% increase in rent paid by a pharmacy company.

Jacqui Johnson, company manager at GP Surveyors, said: “Such a large short fall [in pharmacy rent] is particularly significant at the moment when GP surgeries are being encouraged to tighten their purse strings yet increase the level and variety of the services that they offer.

“If a surgery has agreed a 25 year lease with a pharmacy, an increase of £5,000 per year would amount to £125,000 over the full term!”

Johnson said pharmacy rent should be calculated on a per patient basis, not on the amount of space that the pharmacy occupies. 

“For example, a pharmacy offering a GP practice £20,000 per year to rent a small area of a surgery may seem like a very good offer,” she said.

“This might well be the case if it were for a normal commercial or retail unit. However, renting space from a GP surgery attracts a much higher premium and closer inspection may reveal that the rent should in fact be much higher than this.”

GP landlord must ensure that they serve notice at the correct time in order to review a pharmacy rent as leases often include strict deadlines with small windows of opportunity in which to do this.