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Pharmacy business - What rights do I need in my pharmacy lease?

17 July 2015

Pharmacists often operate their businesses from leasehold property within part of a building or health centre.  In such instances, the extent of the rights granted in a lease can significantly impact on the ability of the tenant to use the pharmacy and successfully carry out its business. 

The extent to which rights are required will depend in each case on the nature of the property and the building in which the property forms part, but set out below are some of the most common rights we would suggest considering for a lease of a pharmacy unit within a building, so that a pharmacy tenant can fully operate from the property.

  • Common parts – a pharmacy tenant needs to consider the grant of rights over common parts where the lease is not a self-contained building with direct access to the public highway.  These rights may include rights to drive along estate roads belonging to the landlord, which are not public highways, to pass over corridors/stairs and to use lifts within the building.  In addition, a pharmacy tenant with a lease of part should request a right of entry to adjoining parts of the building in order to carry out repairs, alterations or additions permitted by the landlord.  A landlord will often request that this is limited, so that this right will only apply if such repairs, alterations or additions cannot reasonably be carried out without entering the landlord’s property.
  • Signage – a pharmacy tenant will usually want to install signage and a pharmacy sign on the exterior of the building as well as directional signage in any common parts.  If the leased property does not include the shop front or fascia, a lease will need to grant a specific right for external signage. 
  • Car parking spaces – new health centres are increasingly being built in out of town locations. A pharmacy tenant might need the right to use a certain number of spaces in the car park. We recommend that the number of car parking spaces allocated to the pharmacy are stated in the heads of terms and that a plan is attached indicating the location of the spaces, which is then reflected in the lease.   
  • Fire escapes – a tenant should consider if any rights of escape are needed through fire escapes within the building for emergencies.
  • Toilet and kitchen facilities – a small pharmacy in a health centre may not have its own toilet and kitchen facilities, so they may wish to share these with other tenants in the building.
  • Passage of services – a tenant will need the right to use pipes and cables forming part of the building which are not within the property included in the lease so they can connect to the public supply.  This includes for example water, gas and electricity services.
  • Support and protection – a tenant of any lease of part will always require a right of support and protection from the remainder of the building. 
  • Air conditioning units and equipment/satellite dishes – a tenant may want to install air conditioning units and equipment and/or a satellite dish on the exterior of the building and then connect these to the pharmacy with all necessary cables, pipes and wires. You may also need a right of access in order to inspect, repair, renew, replace and/or remove them.
  • Security grilles – as break-ins of pharmacies are becoming increasingly common, a tenant may require a right to install security grilles over the external window and door frames of the pharmacy. Again, if these are not part of the property included in the lease, a specific right will be required.

We recommend investigating the rights required to operate the pharmacy business prior to heads of terms being agreed.  The Code for Leasing Business Premises in England and Wales 2007 (the “Code”) aims to promote fairness in commercial leases and seeks to increase awareness of property issues – especially amongst small businesses – so that prospective tenants have the information necessary to negotiate the best deal available to them.  The Code contains a model set of heads of terms which can be completed online and downloaded.  Although this is not a substitute for professional advice, we would encourage prospective tenants to consider the model heads of terms, which contain a section on rights to be granted, so this fundamental aspect of any lease of part is not overlooked.

This article was published in Pharmacy Business, July 2015 and was written by Asfa Javed.

The above is a general overview and we recommend that independent legal advice is sought for your specific concerns. If you require further information in relation to the points raised in this article you should contact Asfa Javed who is a solicitor and member of the Pharmacy Transactions Real Estate Team at Charles Russell Speechlys LLP.