If you’re a GP or practice manager looking to expand or relocate, you’ve probably noticed that medical office buildings (MOBs) are some of the most stable properties in commercial real estate. Vacancy rates have stayed lower and more consistent than traditional office space since 2018, and average rents have climbed roughly 18% over the same period, reaching about £20 per square foot in 2025. That stability is good news for landlords, but it means you’re competing in a market where demand has outpaced new supply by millions of square feet since the pandemic. I’ve been watching this space for years, and the question I hear most often is: how do you secure the right space without overpaying or locking yourself into a lease that doesn’t fit your practice? Here’s what you actually need to know.
Before you start viewing properties, you need to understand how the market has shifted. Outpatient and ambulatory care is growing fast, and health systems are consolidating into larger, modernised spaces in suburban and high-growth areas. That means the best properties get snapped up quickly. If you wait too long, you’ll be left with older buildings that need expensive fit-outs. My advice is to start your search early and be clear about what you need. A practical search strategy can save you weeks of wasted viewings. And if you’re worried about security during the transition, a home security starter kit can give you peace of mind while you’re setting up your new practice.
What a medical office lease actually means for your practice
The most important thing to understand is that a medical office lease isn’t like renting a shop or an office for a law firm. Healthcare tenants sign longer leases, typically 10 to 15 years, because the cost of fitting out a clinical space is high and the disruption of moving is significant. Landlords know this, so they’re willing to negotiate on rent and incentives, but they’ll also expect you to commit. The term you’ll hear most often is service charge.
I always tell people to scrutinise the service charge breakdown before signing anything. Some landlords bundle in costs that have nothing to do with your practice. If you’re unsure, a detailed guide on service charges can help you spot the red flags. And if you’re planning to install smart monitoring for temperature or humidity in storage areas, a Wi-Fi water leak detector is a small investment that can prevent costly damage.
Why the new NHS premises rules change everything
The National Health Service (General Medical Services Premises Costs) Directions 2024 came into effect on 9 May 2024, replacing the old 2013 rules. This is the biggest shift in primary care premises policy in over a decade, and it directly affects how much financial help you can get. The headline change is that commissioners can now award improvement grants covering up to 100% of project value, subject to a business case assessment. Previously, there was a long-standing restriction on how much they could contribute. That’s a massive difference for a practice looking to expand or modernise.
Let me give you a scenario. Say your practice needs to build an extension to accommodate more patients. Under the old rules, you might have had to fund a significant portion yourself. Now, you can apply for a grant that covers the full cost, including buying the land specifically for that extension. The same applies to tenant fit-out works in new builds. But there’s a catch: if you want to relinquish your core contract during the grant abatement period, you’ll need to repay the remaining grant or arrange for another practice to take over the lease. That’s a serious commitment, so you need to be confident in your long-term plans.
What I’d do in your position is sit down with a property lawyer who understands healthcare premises. The new directions also include provisions for rent reviews that don’t require you to commission your own valuation — just evidence of a negotiation with the landlord. That saves you money and time. And if your landlord tries to add VAT to the rent, you can push back; the commissioner will reimburse it, but only if you’ve made a reasonable effort to avoid it. For a deeper look at how these changes affect your negotiating position, understanding your negotiation leverage is essential.
Where practices get tripped up
I’ve seen the same mistakes repeat themselves. Here are the most common ones, and how to avoid them.
Underestimating the cost of IT upgrades
Digital health and AI adoption is accelerating, and older buildings often lack the power and data infrastructure to support it. If you sign a lease without checking the building’s capacity, you could face a surprise bill for rewiring or installing fibre. One practice I know of had to spend over £15,000 on electrical upgrades because the building’s original system couldn’t handle the load from new diagnostic equipment. Always ask for a full IT audit before you commit. If you’re planning to install smart security or monitoring systems, a full home security kit can be adapted for commercial use with the right setup.
Ignoring the service charge cap
Service charges in medical buildings can be 30–50% higher than in standard offices because of specialised cleaning, waste disposal, and ventilation. Some landlords try to pass on costs that should be covered by the base rent. The fix is simple: ask for a full breakdown and compare it to similar buildings in the area. If something looks off, negotiate a cap on annual increases. The hidden costs of commercial leases can add up fast if you’re not paying attention.
Overlooking the guaranteed period of use
Under the new 2024 Directions, the guaranteed period of use has been aligned with abatement periods and triennial rent reviews. That means if you take an improvement grant, you’re locked into using the premises for a set number of years. If your patient demographics shift or you need to relocate, you could be stuck repaying the grant. Make sure your business plan accounts for at least that minimum period. If you’re unsure about your long-term needs, consider a shorter lease with an option to renew.
Assuming all MOBs are the same
Not all medical office buildings are created equal. On-campus and near-campus buildings near hospitals tend to have higher occupancy and stronger investor demand. Suburban buildings in growing areas are also performing well. But older standalone buildings in declining areas can be a trap. Check local demographic trends and patient demand before you sign. A building that’s cheap today could be empty in five years.
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| Metric | 2018 | 2025 |
|---|---|---|
| Average rent per sq ft | $21.86 | $25.79 |
| Vacancy rate vs traditional office | Lower | Lower and more stable |
| Demand vs new supply | Balanced | Demand exceeds supply by 4.7M sq ft |
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How to secure the right space for your medical clinic
Here’s a practical, step-by-step approach based on what I’ve seen work best.
Start with a location audit, not a property search
Before you look at a single building, map out where your patients live and where demand is growing. Suburban and “Smile State” markets are seeing the fastest growth in outpatient care. Use NHS data and local demographic reports to identify areas with an ageing population or a shortage of GPs. That’s where you want to be. If you’re expanding into a new area, a pop-up or flexible lease can let you test the market before committing long-term.
Get professional advice early
The new 2024 Directions are complex, and the application process for improvement grants requires a detailed business case. You’ll need a property lawyer who specialises in healthcare premises, and possibly a surveyor who understands NHS cost reimbursement. Don’t try to navigate this alone. The cost of professional advice is usually recoverable under the new rules, so it’s not an expense — it’s an investment. If you need to find a specialist quickly, a tenant landlord lawyer can review your lease terms and flag any issues before you sign.
Negotiate the service charge and rent review terms
Rent reviews under the new directions don’t require you to commission your own valuation — just evidence of a negotiation with the landlord. That’s a big win for tenants. Use it to your advantage. Also, push for a cap on service charge increases, and make sure the lease clearly states what’s included. If the landlord refuses, ask for a detailed breakdown of historical charges. A building with a history of high service charges is a red flag.
Plan for future-proofing
Digital health and AI are changing how practices operate. Make sure the building has adequate power, data connectivity, and space for future equipment. If you’re considering a conversion from traditional office space to medical use, check whether the landlord has experience with healthcare tenants. Conversions are becoming more common, but they require significant investment in ventilation, plumbing, and infection control. A flexible lease structure can give you room to adapt as your practice grows.
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1Audit your patient demandUse NHS data and local demographics to identify growing areas. Don’t rely on gut feeling.
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2Hire a specialist lawyerFind a property lawyer who knows the 2024 Directions and can review your lease and grant application.
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3Negotiate key termsFocus on service charge caps, rent review frequency, and the guaranteed period of use.
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4Check IT infrastructureCommission an IT audit before signing. Factor upgrade costs into your budget.
Frequently asked questions
Can I get an NHS improvement grant if I’m a leaseholder, not an owner-occupier? ▾
What happens if my landlord adds VAT to the rent? ▾
How long does the grant abatement period last? ▾
Do I need a valuation for a rent review under the new rules? ▾
Can I use an improvement grant to buy land for a new building? ▾
The key takeaway is that the 2024 Directions have made it significantly easier to fund improvements and expansions, but they’ve also tightened the commitment period. My advice is to move quickly while demand for MOBs is still strong and grant funding is available. Start with a location audit, get a specialist lawyer on board, and negotiate your service charge and rent review terms before you sign anything. If this was useful, you might also want to read UK commercial property: are long-term leases a relic of the past?
Sources and Further Reading
Rooftop lease tips for renting commercial space in the UK — Practical advice for practices considering unconventional lease arrangements.
The Pulse of Medical Office Leasing: Trends, Insights, and Opportunities. Colliers, 2025.
Guide to the changes to primary care premises policy. NHS England, 2024.
Strong Tailwinds, Tight Supply: Healthcare Real Estate in 2026. Coydavidson, 2025.
