HS Financial Services - Sell your practice but keep the property: what are the benefits?
Sell your practice but keep the property: what are the benefits?

Sell your practice but keep the property: what are the benefits?


When it comes to retiring or moving into new avenues, principal dentists are met with a number of choices. It can be hard to let go of a business that you have spent years investing time, energy and care into making success. However, outright selling isn’t the only option.


In fact, there is an easy way to ensure that your business continues to be an investment for you even after you sell it – selling the business but retaining ownership of the property. In fact, you can generate a significant amount of revenue this way, which can be put towards retirement plans and other areas that you wish to invest in.


To look at it in basic terms – property will always have value. Of course, the monetary value of your property will depend on the location, size and other aspects, but as commercial properties are highly desirable, especially for essential services such as dentistry, its value is likely to continue growing.


The rising worth of commercial properties is influenced by the general inflation of property prices over the years. For example, in 1950, the average commercial property cost £1,891 (equivalent to £65,224 in today’s currency). Fast-forward to 2021, and the average commercial property price now stands at £231,215 – a considerable sum that, in itself is a good nest egg.


However, one very sensible option to pursue is to use this property to generate more income. By selling only the business and retaining the ownership of the property itself, you can easily earn yourself a considerable sum of money through rent alone.


The UK average rental yield is 6.2%. Bearing this in mind, a typical £550k commercial property would bring in £310k of income over a ten-year period. This figure is without calculating the potential for continued inflation, but if the property market does continue to grow at the same rate, by 2031 your £500k property will be worth £1,027,000, with the ten-year yield equalling £837,000.


Although this money will be taxed, it is effectively pure income. As such, depending on the yield of your property, you could be earning a reasonable salary without having to put in any work.


But what about acting as a landlord? You may think that renting out a commercial property entails being constantly on call to replace windows, fix boilers and all of the other tasks that apply to renting out a residential property. However, under a commercial lease this is not the case. The vast majority of commercial leaseholds put the onus of maintenance on the individual who is renting the business space, meaning that they are responsible for the upkeep of the property alongside utility expenses and other business-running costs.


So, what to do with this added income? Investing the money in a Self-Invested Personal Pension (SIPP) is a particularly smart idea. A SIPP allows you to manage your own investments and make changes and additions to these as regularly as you like. Due to this flexibility, a SIPP offers individuals a number of choices, and you can invest in a wide range of assets. As with any financial move, it’s paramount to enlist the advice of an experienced financial adviser with understanding of your particular needs.


MediEstates, working closely with the rest of the Henry Schein group, offers principal dentists practical, tailored advice that will help them navigate selling their business but retaining the property, as well as supporting the follow-up investments. With years of experience working directly with the dental industry, the team has a unique understanding of the market and will always work with you to ensure that any financial goals are met.


To find out more, please contact the team today.


For more information, contact MediEstates on 01332 609318 or

visit www.mediestates.co.uk


Posted by: Gareth Walton on

General Buyer Terms

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 2018. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
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