The business of valuing for GP-based healthcare premises & practices

Last May (2025), the Government announced a cash injection of £102 million of capital funding for bricks and mortar upgrades within GP-based healthcare services. It’s a healthcare space in which BTG Eddisons' Specialist Valuations team is particularly active at the moment according to Mark Searby, a Director in this specialised field of property practice.

What are the circumstances in which you are asked to conduct a formal trading valuation for a GP practice or GP-led healthcare centre?

Common to the context in which we carry out valuations across a range of sectors, it can be on instruction from the lender on a three or five-yearly review. However, specific to the GP sector, it’s more often than not because of a restructuring of the GP partnership business.

In the latter scenario, we might be instructed by the partnership directly to ascertain the value of, for instance, a retiring partner’s share of the property or the business or that of an incoming partner’s ‘buy-in’ share. Equally, we could be instructed by the lender in the case of re-financing the restructure.

It’s important to state that a valuation of a GP surgery isn’t actually a conventional ‘trading valuation’ as the sale of the ‘goodwill’ of a practice in this sector is forbidden by law.

It’s a specialist investment valuation that requires an understanding of the peculiarities of the set-up of a GP practice business and the sector in which it delivers healthcare services.

How does it differ from a conventional trading valuation then?

The valuation is underpinned by the Notional Rent which is determined by the District Valuer. This ‘rent’ is paid by the NHS to the Partners of the practice for the use of the GP premises in which to deliver NHS healthcare services.

In valuing, we will review the Notional Rent (also known as the Current Market Rent - CMR) and ascertain whether it has been reviewed recently and whether or not it appears reasonable based on our knowledge of similar premises. We also have to regard any abatements - such as NHS financial contributions to building development or improvement works, among others. Plus, consider the income which is received in undertaking an investment-based valuation.

A key factor which underpins the yield calculations we use is the suitability for its continued use. Is the practice building and/or its facilities dated? Is it operating at capacity? Or, if a modern facility, does it have capacity for many more patients?

In the first instance the yield would reflect greater risk and flag uncertainty about longevity and viability of the property in delivering modern GP-based services.

If the premises are modern, it could well be perceived that the property could remain in use as a surgery for 30+ years - and, thereby, a relatively ‘safe’ investment.

The scope for its vacant possession sale is an angle that may be factored into the valuation too, if it’s a particular aspect the lender has asked to be considered.

If an older property ceased its use as a GP practice surgery, what would it be used for, and what would the value on that basis be? An older former house may go back to being a house, whereas a purpose-built surgery might be suitable for animal healthcare as an alternative use, for example.

It’s also not uncommon to have to consider ‘branch’ surgeries, which, although physically distant - albeit generally within the local area - from the main practice premises are part of the valuation process too in being part of the business.

So there's no such thing as a ‘typical’ GP premises from a bricks & mortar point of view?

Not really, although, more and more of the ‘legacy’ type premises - i.e., an old house converted for GP use that probably has a heritage back to the early days of the NHS, if not before, when the local doctor practised from, more often than not, a spare room in their own house - are phasing out of use in no longer being fit for purpose or worth maintaining.

Many of these older houses have had annexes built on down the years but again these are dropping away from being viable premises in which to offer modern-day GP healthcare services.

But, yes, they do come in all shapes and sizes and even purpose-built premises built in the early 1990s are ageing in terms of the GPs’ and their patients’ expectations of an acceptable and practical environment.

Any other observations about the GP sector in looking to the future?

It has always has been a niche sector in which to value, and that’s over and above the myriad styles of premises. It cannot be overstated enough that the fact that legislation prohibits the sale of goodwill of GP premises means that no other financial aspect can be considered beyond the notional rent reimbursement and so it remains a specialist field in which to assess ‘value’.

There is an increasing appetite from institutional investment funds for the larger type of GP practices and this introduces another element to a valuation.

With successive governments indicating that the accepted funding model of the NHS cannot remain in perpetuity and the present administration committed to reforming the NHS - and other political parties committing publicly to changing the model towards a more insurance-based health system - the spotlight on the business of delivering primary healthcare at GP practice level is set to shine more brightly as we enter the second quarter of the 21st Century.

Choosing BTG Eddisons for your specialist valuation

Conducting trading valuations is just one aspect of BTG Eddisons portfolio of healthcare property services. It sits alongside conventional Red Book valuations, acquisitions & agency - including S106 funding advice - sustainability and building consultancy.