third party developer lease

The 3PD model involves a partnership between public sector and private sector by which private developers fund the capital cost of construction of new medical premises and the general practitioners enter into a lease with the developers. The general practitioners are able to receive reimbursement of rent from their local NHS board. Local NHS boards in Scotland have, in the past few years, taken advantage of a particular form of Private Finance Initiative vehicle, the "Third Party Developer" lease model ("3PD" leases).

We have acted as legal advisers for several GP practices in recent medical centre developments across Scotland, including those intended to operate under these so-called "3PD leases" and are familiar with the issues which tend to arise. 

Click here for some general guidance on 3PD leases.  For general practitioners wishing to obtain a more comprehensive guide to 3PD leases, please contact Michael Dewar and we will email this to you.

guidance on 3PD leases

3PD leases are typically drafted as standard commercial/industrial leases with a handful of special clauses on, for example, rent reviews.

Our starting position is to argue that 3PD leases are not the same as genuine private sector leases in that the landlords, unlike in the private sector, are virtually guaranteed payment of rent through the rent reimbursement scheme.  It follows, we argue, that the landlords should carry more responsibilities for the premises than a genuine private sector landlord - for example, the landlords should retain responsibility for remedying latent or inherent defects.  Often the changes we manage to negotiate are “in the detail” of the lease.

Detailed changes made to a lease by lawyers who know what they are doing may ensure GPs are not exposed to contingent risks and may even save GPs many thousands of pounds in the longer term.  We would adopt this approach in negotiations with solicitors acting for the 3PD developer on the terms of the development agreement, leases and construction guarantees to be provided to GP practices.