When partners leave a GP partnership faster than new ones join, the liability attached to the surgery does not shrink to match. A leasehold practice can leave the remaining partners, in the worst case a single partner, holding the whole lease. An owner-occupier practice can leave departing partners unable to find anyone to buy their share of the building. This is the last man standing problem, and it has become the single biggest reason incoming partners now hesitate to buy in to premises.
This guide explains how the risk arises, why it has grown, the protections that have been built in (the contract-linked break right in the NHS standard lease, and the negative-equity protection in the Premises Costs Directions), and how the partnership deed and the ownership structure are used to manage it. It is written for partners weighing a buy-in and for practices trying to make their premises liability survivable. It is risk awareness rather than legal drafting advice, and premises remain a specialist area where practice-specific advice matters.
What last man standing actually means
The plain version is this: when partners leave and are not replaced, the liabilities tied to the surgery do not disappear. A lease still runs for its term. An owned building still carries its loan. Those obligations concentrate on whoever remains, and if numbers fall far enough they can land on one partner, potentially exposing that individual to the whole liability.
There are two flavours. The leasehold version leaves one partner on the hook for the full lease and the end-of-lease dilapidations. The owner-occupier version leaves a departing partner unable to sell their share of the building, or leaves the practice holding surplus or over-valued premises on its books. Both stem from the same root cause: premises liability is fixed by contract and does not flex with partner numbers. This is why premises risk now sits near the top of any buy-in conversation, and why it deserves to be understood before, not after, a partner commits.
Why the risk has grown
Several pressures have pushed this risk up the agenda. Partnership numbers have been under strain, with partners leaving for salaried, locum or portfolio roles and fewer clinicians willing to take on premises liability. Many surgeries sit on long leases, and some were developed at a scale that made sense for a larger partnership than the one now occupying them. Recruiting an incoming partner willing to buy in to the building has become harder, which removes the natural buyer for an outgoing partner's share.
The result is a structural mismatch: the premises were taken on by a partnership that expected to stay roughly the same size, while the partnership itself has become smaller and more fluid. We keep this factual and avoid putting numbers on the trend, because the national picture varies and the point that matters is the dynamic, not a statistic. For the broader financial picture of becoming a partner, see our guide to the financial implications of becoming a GP partner.
How the risk concentrates: an illustrative walk-through
It helps to follow the dynamic through an anonymised, clearly illustrative example rather than describe it in the abstract. The figures and timings below are made up to show the mechanism, not to describe any real practice. Picture a partnership that, some years ago, took a long lease on a purpose-built health centre sized for six full-time partners. At that point the lease liability, the rent and the eventual dilapidations were spread six ways, and each partner's slice of the obligation felt manageable against their profit share.
Over the following years the partnership thins. One partner retires and is replaced by a salaried GP rather than a new partner, because the practice cannot find an incoming partner willing to take on the lease. A second partner moves to a portfolio career and, again, is backfilled with sessional and locum cover. A third reduces to a part-time clinical role outside the partnership. The clinical work still gets done, but the number of partners actually signed up to the lease has fallen, while the lease itself has not changed at all. Its term still runs, the rent is still due, and the repairing and dilapidations obligations are unchanged.
The arithmetic is unforgiving. The same fixed liability that once sat across six partners now sits across two or three, and because the liability on the lease is usually joint and several (covered below), each of those remaining partners is individually exposed to the whole of it, not merely a larger fraction. If the thinning continues to a single remaining partner, that one GP can in principle stand behind the entire rent and the full end-of-lease repairing cost on a building scaled for a partnership several times larger. Nothing dramatic has to happen for this to arise: no insolvency, no dispute, just ordinary retirements and career changes that are not matched by incoming partners willing to take on the premises. That is precisely why the risk is structural rather than exceptional, and why it is worth planning for before, not after, the partnership starts to thin.
The owner-occupier version of the same walk-through runs in parallel. Replace the lease with an owned building carrying a loan, and the departing partners now want their capital (their share of the building) returned on exit. If no incoming partner will buy that share, the remaining partners must either fund the buy-out from their own resources or leave the share unsold, and the loan and the upkeep continue to fall on a shrinking group. The liability has moved from a lease to a building, but the concentration mechanism is identical.
The leasehold version of the risk
In a leasehold practice the central feature is joint and several liability. Partners are usually jointly and severally liable on the lease, which means the landlord can pursue any one partner for the whole of the rent, and for dilapidations at the end of the term, regardless of that partner's share of the practice. The Partnership Act 1890 sits behind general-partnership liability, and it is unforgiving in this respect.
The last man standing exposure
If partners leave without the lease being reassigned, and no new partners take on the lease obligations, the remaining partner can face the full ongoing rent and the repairing obligations on a building far larger than one GP can use or fund. The lease does not care that the partnership has shrunk. This is the leasehold version of the problem in its starkest form, and it is the scenario the protections below are designed to soften.
The NHS standard lease and the break right
The NHS Property Services and BMA standard lease for health-centre occupiers typically includes a tenant break right tied to the core NHS contract: the tenant can break the lease if the core NHS contract is terminated or not renewed. That is more favourable than a typical commercial lease, where the tenant is generally locked in for the term with at most occasional break dates. It is a genuine protection, because it links the property obligation to the income that supports it. It is not a complete fix, though: it is contract-linked rather than an at-will exit, and the exact wording varies, so the lease itself has to be read carefully rather than assumed.
Surplus premises and dilapidations
Two further leasehold exposures deserve a flag. The first is dilapidations: at the end of the lease the tenant is usually liable to put the premises back into the contractual state of repair, which can be a significant cost that lands on whoever holds the lease at that point. The second is being tied to surplus space the practice no longer needs but cannot easily give up. Both are reasons to understand the full lease terms before taking them on, and to plan for the end of the term rather than only the start.
The owner-occupier version of the risk
Where the partnership owns its surgery, the risk takes a different shape. Departing partners naturally want their capital out, which means their share of the building. But if incoming partners increasingly will not buy in, there is no ready buyer for the outgoing share. The remaining partners may have to fund the buy-out themselves, or the share simply sits unsold.
Negative equity and surplus premises
Where a building is worth less than the loan secured on it, or is over-specified for current needs, the difficulty deepens: departing partners are reluctant to release on poor terms, and incoming partners are reluctant to take on a liability that exceeds the asset value. There is a specific protection here. Under the Premises Costs Directions, an owner-occupier cannot be required to repay more than the actual sale price, or the best price reasonably obtainable on the open market. That is designed to stop a grant clawback from creating negative equity. It is genuine mitigation, but it does not conjure a buyer or release trapped capital, so it limits the downside rather than removing the problem. The mechanics of notional rent and grant abatement that sit behind this are covered in our guide to notional rent vs cost rent.
Why incoming partners resist buying in
The core dynamic is simple. Incoming partners look at the liability, the illiquidity of a surgery as an asset, and the recruitment trend that makes a future exit uncertain, and many decide a salaried role or a non-property-owning partner route suits them better. That decision is rational at the individual level, but in aggregate it removes the buyer that the outgoing-partner model relies on. Understanding this is the key to managing the risk: the structures and deed provisions below exist largely to make buying in less daunting, or to make the building survivable without a steady stream of buyers.
The two-tier partnership: property-owning and non-property-owning partners
A common response is to hold the premises in a separate property partnership or LLP, outside the medical partnership. Only some partners (the property owners) carry the building, while clinical partners can join the medical partnership without buying in to the premises. This decouples the clinical career decision from the property investment decision. We explain the structure at a high level here and cover its tax detail, including SDLT, capital allowances and capital gains tax, in the own vs rent tax guide.
The advantages
New partners can join without a premises buy-in, which directly addresses the recruitment barrier. Property risk is ring-fenced from the clinical partnership, so a problem with the building is less likely to destabilise the practice. And the rent stream, with its interest deduction, is cleanly separated in its own vehicle, which keeps the income and the relief on the same side.
The cautions
The property partners still carry the liability; separating the vehicle moves the risk, it does not remove it. The structure has to be documented carefully, with the property-partnership agreement, the lease and the medical-partnership deed all consistent with each other. And it does not by itself solve the last man standing problem if every property partner wants out at the same time. So this is a structure to weigh with advice, not a guaranteed escape from the underlying dynamic.
How the partnership deed manages the risk
The deed is the primary control. The levers below are framed as matters to ensure your deed addresses, settled with your solicitor and accountant, rather than as drafting advice.
Limiting simultaneous exits
A well-drafted deed can cap how many partners may retire in a single accounting period. That prevents a domino collapse of partner numbers, where several exits in quick succession leave the rest exposed before any recruitment can catch up. Staggering exits buys the time needed to recruit, restructure or assign.
Notice periods and buy-out terms
Long notice periods give the practice room to plan. Clear buy-out terms, including how a premises share is valued and the timing of payment, remove the uncertainty that otherwise has to be negotiated under pressure at the point of exit. The deed should spell out what happens to an outgoing partner's premises share, so nobody is relying on goodwill at a difficult moment.
Continuity and avoiding accidental dissolution
Provisions that keep the partnership going, rather than dissolving it on a partner's departure, matter because an unintended dissolution can crystallise liabilities. A partnership at will (no deed, or a deed that has lapsed) is especially dangerous here, because the default rules can allow dissolution on notice in a way that nobody planned for. A current, continuity-minded deed is the antidote.
How a premises share is valued and bought out
One clause does more practical work than almost any other: how an outgoing partner's premises share is valued, and when it is paid. Without a clear mechanism, every exit becomes a negotiation conducted at the worst possible moment, when one side wants out and the other does not want to fund a buy-out. A workable deed (or, where the building sits in a separate vehicle, the property-partnership agreement) usually sets out who values the share (commonly an independent surveyor), the basis of that valuation, and a timetable for payment that does not place an unmanageable demand on the remaining partners all at once. Staged payment terms, for example, can let the continuing partners absorb a buy-out without a cash crisis. The point is not the precise mechanism, which is a matter for your solicitor, but that one exists and is agreed in advance rather than improvised on exit. We deliberately do not suggest a valuation figure or formula here, because a premises valuation is property-specific and a matter for a surveyor.
Aligning the deed, the lease and the property structure
The deed, the lease and any property-partnership agreement must be consistent. If the deed assumes the premises sit in a property partnership but the lease is held by the medical partnership, or if the buy-out mechanics in the deed conflict with the property-partnership agreement, the protections can fall apart at the moment they are needed. A common failure mode is documents drafted at different times by different advisers that quietly contradict each other: the deed promises a buy-out the property-partnership agreement does not fund, or the lease names tenants who are no longer the current partners. Reviewing all three together, and refreshing them when partners join or leave, is the safest approach. This is also where the accounting and the legal documents have to line up, because the way the premises and the buy-out obligation are recorded in the partners' capital accounts has to reflect what the deed actually says.
What an incoming partner should check before buying in
A practical due-diligence list, to work through with professional advice and without relying on any assumed figures:
- The lease term and any break rights, including the contract-linked NHS break right and its exact wording.
- The dilapidations exposure and who would bear it at the end of the term.
- The premises valuation, and how the buy-in and any future buy-out are priced.
- Whether the premises sit in a separate property partnership or in the medical partnership.
- The deed's exit and retirement-limit provisions, notice periods and continuity terms.
- Where the premises are owned, the loan position and the notional rent supporting it, covered in our notional rent guide.
What a last man standing partner can actually do
If you are the remaining partner, there are options, though none is guaranteed and all should be taken with professional advice. Engage the ICB early: they have a view of the local landscape and may know of practices looking to expand or take over. Explore assignment of the lease to another practice. Consider surrender, if the landlord will agree. For grant-funded premises, the Premises Costs Directions provide routes such as assignment to an NHS nominee, or an application to waive residual grant repayment. The common thread is to start the conversation early, because the workable options narrow as time runs down.
Assignment, surrender and the NHS routes in more detail
It is worth understanding what each of those routes actually involves, because they are not interchangeable. Assignment moves the lease to a new tenant, typically another practice or an NHS body, and is usually the cleanest exit where a willing assignee exists, but it normally needs the landlord's consent and the assignee has to be acceptable to both the landlord and the commissioner. Surrender hands the lease back to the landlord and ends it early, which only happens if the landlord agrees and often only on terms (a payment, or settling outstanding dilapidations), because the landlord is giving up a paying tenant. Neither is automatic, and both take time to arrange.
For premises that received improvement grants or other capital support, the NHS premises policy framework adds a further set of routes aimed precisely at a partner who cannot find a buyer. These can include assignment of the interest to an NHS nominee, and, where residual grant would otherwise have to be repaid, the ability to apply for that repayment to be waived rather than enforced. The negative-equity protection described earlier sits in the same framework: an owner-occupier cannot be required to repay more than the actual sale price, or the best price reasonably obtainable on the open market. Taken together these are meaningful backstops, but they are applications and consents, not entitlements, so the outcome depends on the commissioner and the specific premises. The practical message is unchanged: open the conversation with the ICB and your advisers well before the situation becomes urgent, because every one of these routes works better with time in hand.
Surplus and over-specified premises
A related problem is space the practice no longer needs. A building scaled for a larger partnership, or for services that have since moved elsewhere, can leave the practice paying for and repairing rooms it cannot fill. Sub-letting part of the premises to another health provider, where the lease permits it and the landlord and commissioner agree, can sometimes share the cost, though it brings its own management and lease-compliance obligations. The honest position is that surplus premises rarely have a tidy fix, which is one more reason the size and flexibility of the premises commitment deserve thought at the point it is taken on, not only when it has become a burden.
The tax and accounts angle
Kept proportionate, because the detail lives in the sibling guides. How the premises sit in the accounts (the capital accounts, or the separate property partnership), the loan-interest deduction against the rent, and the capital gains position on an eventual disposal all interact with the decisions above. The notional rent and cost rent guide covers the rent income and its tax, and the own vs rent tax guide covers the structure, SDLT and capital gains tax. For the partnership and capital-account basics, see our GP partnership tax guide, and for how profit shares and partner numbers interact, our profit-sharing tax planning guide.
Common misconceptions
- The NHS will always bail out the lease. Not so. The break right is contract-linked, not automatic, and it depends on the actual lease wording.
- Buying in to premises is always a bad idea. Not so. Owner-occupiers benefit from notional rent and asset growth, as the notional rent guide and own vs rent guide explain. The point is to enter with eyes open, not to avoid ownership on principle.
- A handshake partnership is fine. A partnership without a current written deed is the most exposed of all, because the default rules can produce an uncontrolled outcome.
How we help GP partnerships manage premises risk
We work alongside GP partnerships and their solicitors on the accounting and tax side of premises risk. That usually means making sure the way the premises are held, in the medical partnership or a separate property partnership, is reflected correctly in the accounts and the capital accounts, that the rent income and interest deduction sit in the right vehicle, and that the buy-in and buy-out numbers in the deed are workable and consistent with the property structure.
We do not draft deeds or leases, which is your solicitor's role, but we help make sure the financial mechanics behind them hold together, and we model the tax effect of the structures being considered. For the rent and its tax, see the notional rent vs cost rent guide; for the structure and disposal tax, the own vs rent tax guide; for our wider work with GPs, how we help GPs, our practice management guides, or get in touch.