Healthcare premises finance for clinics buying their building

• Control over a fitted building: a clinic spends heavily on plumbing, ventilation, finishes and room layout. Owning the building protects that investment from a landlord's decision not to renew.
• Replacing rent with repayments: mortgage repayments build equity, whereas rent does not, although the monthly outgoing is not always lower.
• Room to grow: an extra treatment room, a gym space for rehabilitation, or an imaging suite may need structural changes a landlord would not allow.
• Retirement planning: some owners hold the building separately so that it can produce rent after they sell the clinic.

A lender's valuer asks what the property would sell for if the clinic left. The cost of your treatment rooms, specialist air handling or lead-lined X-ray room usually adds little to that figure and can reduce it if another occupier would have to strip it out. A building that could easily be let to offices, retail or another healthcare occupier is valued more robustly than a converted house in a residential street.

Planning use matters here. Since 2020, medical and health services in England fall within the broad Class E commercial use class alongside shops, offices and gyms, which generally makes clinic premises more flexible to re-let or sell. The Planning Portal explains how use classes and change of use work. Buildings with a different or restricted use, conditions tied to a particular occupier, or a residential element above the clinic need careful handling, and some lenders treat mixed-use property differently. Any flat that is lived in is outside what we arrange.

The deposit is rarely the only cash required. Allow for:

• Stamp Duty Land Tax at non-residential rates in England, or the equivalent taxes in Wales and Scotland.
• VAT on the price where the seller has opted to tax the building. Most clinical services are VAT exempt, so a clinic buying in its trading company may not be able to recover that VAT; a transfer of a going concern or a separate property company can change the position, so take advice early.
• Valuation, survey, legal fees for you and the lender, and any arrangement fee.
• Adaptation works to suit clinical use, and the cost of moving and any gap in trading.

Illustration only, with round hypothetical figures and no rates. A private physiotherapy and sports injury clinic has rented a two-storey commercial building for eight years. The landlord offers to sell it for £600,000.

• A lender values the building at £600,000 and offers a commercial mortgage of £420,000, 70% of value, over 20 years.
• The owners fund the £180,000 balance and the purchase costs from personal savings and dividends drawn from the clinic's retained profit, having checked with their accountant that the clinic keeps enough cash to trade.
• They buy through a new property company, which grants the clinic a ten-year lease at market rent, so the clinic's accounts continue to show rent and the property company's rental income services the mortgage.
• Because the clinic stays at the same address, no change of registered location is needed and trading is uninterrupted.

Buying ties up cash that could fund equipment or staff, and concentrates your wealth in the same location as your income. If the clinic struggles, the building is at risk as well as the business. A commercial mortgage usually needs personal guarantees from directors, and early repayment charges can make a later move expensive. If the plan is to extend or reconfigure after purchase, budget that separately; our page on practice refurbishment finance covers funding the works. Where a purchase forms part of buying the clinic itself, see healthcare practice acquisition finance.