Dilapidations and Making Good: What GP and Dental Tenants Must Know Before Renovating a Leased Surgery

A practice that owns its own building can renovate on its own terms, subject only to planning and Building Regulations. A practice operating from a leased GP surgery or dental premises — as most do — is answering to a second set of rules first: the terms of the lease itself. As covered in our guide to GP surgery lease negotiations, most NHS primary care leases run 15 to 25 years and place significant repairing and alterations obligations on the tenant. A renovation project changes the physical building those obligations attach to, which means it has to be planned around the lease, not just around the construction programme.

Two distinct risks sit either side of a leasehold renovation. Before the works, the risk is proceeding without the landlord's consent. After the works, the risk is what you are obliged to undo when the lease ends.

Most commercial leases, including standard NHS primary care leases, contain an alterations covenant requiring the landlord's written consent — usually formalised in a licence to alter — before any structural or otherwise significant works. Carrying out qualifying works without that consent can constitute a breach of the lease, regardless of how much the works improve the premises, and can expose the tenant to a claim requiring reinstatement to the original layout.

Why Renovating a Leased Surgery Is a Legal Question Before It Is a Building One

A landlord's consent requirement exists to protect the value and letability of their asset, not to obstruct a tenant's improvements. But the practical effect is the same either way: proceed without the correct consent, and the landlord retains the right to treat the works as a breach, however much clinical or operational sense they made.

What Is a Licence to Alter and When Do You Need One?

• Typically required for structural changes, significant mechanical and electrical works, or anything that could affect the landlord's ability to re-let the premises to a different tenant in future
• The licence should specify the approved drawings and specification, any conditions attached to how the works are carried out, and — critically — the reinstatement position at lease end
• Landlords commonly attach conditions such as requiring the use of approved contractors, retention of as-built drawings, and compliance with all relevant statutory consents

What Happens to Your Improvements When the Lease Ends?

1. The default legal position, absent any agreement to the contrary, is that a tenant may be required to reinstate the premises to their pre-works condition at the landlord's request
2. For genuinely beneficial improvements — a compliant decontamination room, an accessible reception, upgraded clinical infrastructure — it is worth negotiating a "no reinstatement" position in the licence to alter, since a landlord letting to another healthcare tenant is unlikely to want those improvements removed
3. Once works are complete, record them as a formal addendum to the Schedule of Condition referenced in the original lease, so there is no ambiguity about what condition the premises were left in

How Does a Renovation Affect Notional Rent and Dilapidations Liability?

As set out in our lease negotiations guide, an improvement to NHS-funded premises can trigger a District Valuer reassessment of notional rent — meaning the benefit of a capital-funded improvement can be partially offset by a higher ongoing rent contribution. Separately, dilapidations liability under the repairing covenant does not go away just because a renovation happened elsewhere in the building: if repairs carried out as part of the project fall below the standard the lease requires, that shortfall still creates a liability at lease end, even in a building that has otherwise been substantially improved.

What Should You Negotiate Before Starting Works on a Leased Building?

• Written landlord consent, formalised as a licence to alter, before any works start on site — not applied for retrospectively once the contractor has already begun
• An explicit reinstatement position recorded in the licence, rather than left to be argued over at lease end
• An updated Schedule of Condition once the works are complete, annexed to the lease or licence as the new baseline
• Written clarification of how the works interact with the next rent review or notional rent assessment, so there are no surprises in the following accounting period