Developing a property fit for practise

Amanda Hiley, a partner at Peter Goolden Designs LLP, says clients always look for convenience – they don’t want to travel too far, especially in emergencies. For her, the best sites are those close to residential dwellings in a large village, town or city.

Parking is clearly the most essential item and it will always be top of the list when building a new premises. Clients have to unload cat baskets or may have to handle larger dogs that are very ill, so owners will need to park very close to the building. She said: “Highway access is essential and if you are combining large farm animals or equine in the new build be aware of clients with horse boxes or trailers – narrow access roads will deter clients.”

David Baybut, a partner and head of commercial property at Stephensons Solicitors LLP, agrees location is critical. He said: “Getting it right should see your business flourish; get it wrong and the decision may be costly and difficult to overcome (legally) later on.”

Choosing the right location

Suitable land in a country as small as ours is very hard to find and veterinary surgeons are in competition with large housing and retail developers.

Ms Hiley said: “Brownfield sites can easily be developed and would generally be supported by a council as they will have, or formerly had, commercial premises on the site and may be lying vacant.” In contrast, a greenfield site is agricultural land that may be out of the council’s development boundaries. “They can be more difficult to achieve planning permission for. However, a small animal practice mixed with equine will require a field alongside for some of the patients, which may tip the scales for the development,” she adds.

Of course, practices also need to consider the competition and size of the local population. Will it support the practice?

Conducting a search

Once the location is settled on and land found for development, practices need, before purchasing, to conduct local authority searches, which includes, says Mr Baybut, a local land charges search. He said: “This search reveals matters affecting the property, including financial charges, planning charges, miscellaneous charges, fenland ways maintenance charges, land compensation charges, new towns charges, civil aviation charges, opencast coal charges, listed buildings charges, light obstruction notices and drainage scheme charges.”

Other parts of the search cover the cost of maintaining roads serving the property, road proposals in the area, enforcement notices against the property and planning applications made, including those refused relating to the property.

It’s worth noting that, apart from road proposals affecting the land within 200m of the property, local authority searches only give information about the property itself concerning the effect of Town and Country Planning legislation, liability for road works, compulsory purchase or demolition orders, financial orders and other matters that could vitally affect it. Naturally, practices will also want to know about such things as tree preservation orders relating to the property, planning permissions granted or restrictions on permitted development. But Mr Baybut offers a caution.

“The search will only reveal matters that fall into the specific statutory definition of a local land charge. In addition, it is restricted to information on the register at the time it was made. Therefore, if a local land charge was registered the day following the search, the property will be taken subject to it. It is important to be aware of this.”

Architects and builders

Choosing the right architect for the project is essential and only someone who has specialist expertise in the required field should be chosen. Recommendations and referrals are the ideal. Ms Hiley suggests having a look at other veterinary practices – not forgetting the practice profiles featured in VBJ – for ideas and recommendations.

“Most practices will welcome vets’ visits to show off its premises and equipment. Take advantage of this and find out about the architect involved. Was the relationship positive, was the architect up to date with RCVS Practice Standards and did he or she deliver a building on time and on budget?”

Practices should be wary of architects who will not give fixed fees. Many charge for amendments to a design proposal, so before an architect is engaged, practices should have clear objectives about the design requirements and ask for an appropriate fee quotation.

This is why Mr Baybut recommends having a formal deed of appointment, so there is no doubt about the job and the payment terms. He added: “It is important to consider who else may be relying on the advice of the architect, such as the funders. Indeed, they may not lend money without assurances.” He says it is important to consider whether the architect and other professionals are able to give warranties to third parties.

Of course, having an architect with commercial premises and veterinary environment experience helps, but it’s also important designs meet current building regulations and also the clinical needs of animals (not humans). Operating theatres, for example, are bigger than those for people.

For this reason, Ms Hiley says practices should prepare a wish list for the building – for example, the number of consulting rooms, operating theatres, wardrooms, offices and any overnight accommodation required. “Include the equipment you may purchase, such as a CT scanner – the room has to be specifically designed around the CT scanner with door openings wide enough to get the equipment in the building.”

Choosing a builder should be a similar process to selecting an architect. Mr Baybut says a specialist architect, with experience in the client’s field, may even recommend a builder he or she can vouch for. He said: “It’s important to look for excellent references, particularly for work he or she has done in the veterinary sector. Recommendations, previous projects, sector experience and warranties are key to making the right decision.”

Ms Hiley says a tender package should be sent to four or five suitable local building contractors. “You have to research them to ensure they have enough staff to see your project through. Do they have good financial security? Carry out a credit check and see what their workmanship is like – look at their projects, speak to customers, drive around and look at what is being built locally. Ask yourself does the site compound look tidy, clean and are the builders all wearing appropriate health and safety clothing?”

Again, Mr Baybut recommends a formal contract should be put in place that sets out the responsibilities and agreed works the builder will carry out. “There are lots of standard contracts that can be used, so care should be taken to use the correct one. Contracts should be looked over by a legal advisor first; experience shows many professionals are very good at choosing a specialist, but not always adept at the contract side of things,” he warns.

Practices can either employ a project manager to be on site each day to monitor and watch the building works, ensuring it is in accordance with the plans, or the architect can act as a contract administrator. He or she will monitor the progress with the onus put on the builder to ensure the planned works are stuck to and not deviated from. A good example of this, says Ms Hiley, might involve a change of one type of specified wall insulation for another – the cost is less for the builder, but it can affect the building’s energy performance levels.

Funding

From experience, Ms Hiley says many funders will request the client employs his or her own quantity surveyor. “He or she will attend each month to carry out building work checks and value the works completed on site. This verifies the interim payments to the building contractors and the drawdown of the business loan to protect the bank’s investment.”

Mr Baybut notes that if the project is funded by a bank, and the property is a new build, the bank will undoubtedly want warranties to protect its investment.

“It can be an expensive and time-consuming exercise obtaining warranties at a later date, so it makes sense to have them integrated into contracts at the outset.”

He points out bridging finance is available for development work, depending on the scheme and individuals involved. However, this can be an expensive means of raising money and it is advised that anyone looking at bridging finance should know at the outset what his or her exit strategy is to redeem such expensive funding arrangements.

As an aside, Mr Baybut says: “If it is an owneroccupier company carrying out the development, be aware funders may well want personal guarantees from individuals within the client company. They should be resisted or at least a cap set on the amount of personal liability.”

In some cases, the property may be developed by key individuals within the business, and then leased back to all owners. Alternatively, it may be bought and developed by the business owner’s pension entities and then leased back to the trading entity. David says there could be tax advantages here, but: “Leases will need to be drawn up and warranties may need to be put in place for the funder and the tenants.”

The overarching advice to anyone undertaking a build project is to ensure they are advised by a good professional team throughout, making sure the documents are put in place to govern the project and actually achieve what the parties intend.