Medical property bridging finance for practices and clinics
Medical property bridging finance is short-term lending secured on healthcare premises, such as a GP surgery, dental or veterinary practice, pharmacy or private clinic, that lets you buy, refinance or adapt the building quickly and repay later from a term mortgage or a sale. We arrange healthcare property bridging through a broad panel of bridging lenders, from specialist lenders to private credit funds.
Healthcare premises split into two very different lending cases. A surgery let to a GP partnership with NHS-reimbursed rent is an investment backed by a strong income stream. A practice buying its own building is an owner-occupier deal where the property and the business goodwill must be kept apart. Lenders approach each in a different way.
Key takeaways
Let surgeries and clinics are valued on investment value, driven by lease, covenant and NHS rent reimbursement.
Purpose-built surgeries can have a vacant possession value well below their investment value.
For owner-occupied dental and vet practices, lenders lend on the property only, not the goodwill.
Medical uses sit in Class E, so converting shops or offices to clinics often needs no change of use consent.
A bridge suits timing, vacancy or fit-out cases; otherwise a healthcare term mortgage is usually cheaper.
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How do lenders value medical and healthcare property?
The valuer's approach depends on who occupies the building and on what terms. Specialist healthcare valuers are often instructed, because the evidence base is narrow.
Premises
Valuation basis
Lender view
GP surgery let to a partnership, rent reimbursed by the NHS
Investment value on rent, lease length and covenant
Well regarded; lenders check the reimbursement position and lease terms
Surgery or health centre let to an NHS body
Investment value
Strong covenant; lease length and breaks still matter
Dental or veterinary practice, owner-occupied
Property valued separately from practice goodwill
Lend on the property only; goodwill is not property security
Private clinic let to an operator
Investment value, depending on operator strength
Varies with covenant and lease
Vacant or purpose-built premises with no tenant
Vacant possession value
Lower LTV; alternative use evidence matters
One feature of purpose-built surgeries is that their vacant possession value can sit well below investment value, because the building suits few other occupiers. Lenders look at that gap closely, especially where a lease end falls near the loan term.
What LTV can medical property bridging finance reach?
A let surgery or clinic with a solid covenant can support LTV up to 70% to 75% on a first charge, in line with standard commercial property. LTV is usually lower where the building is vacant, highly specialised, close to a lease expiry or held on a short lease, or where the loan sits on a second charge. For owner-occupied practices, remember that lenders lend against the bricks and mortar only. Goodwill is funded separately, usually by a specialist bank. Use the LTV calculator to test your numbers.
Leases, NHS income and regulatory approvals
Lenders and their solicitors will want to understand the income and the regulatory position:
NHS rent reimbursement: for GP premises, the level of rent the NHS reimburses, and when it was last reviewed, underpins the investment value.
Lease terms: length, breaks, repairing obligations and rent review basis, plus any agreement for lease on new premises.
Regulator registration: in England, GP and dental practices are registered with the Care Quality Commission, pharmacies with the General Pharmaceutical Council, and veterinary practices sit under the Royal College of Veterinary Surgeons.
NHS contracts: for dental practices and pharmacies, the NHS contract can matter to the business, though the lender's security is the property.
Bring copies of leases, reimbursement letters and registration details to the first conversation.
Have a deal in front of you?Send us the property and the numbers. We will tell you quickly whether it is fundable.
Planning and conversion into healthcare use
Medical and health services sit within Use Class E in England, alongside shops and offices. That means converting a vacant shop or office into a clinic, dental surgery or physiotherapy practice often does not need planning permission for the change of use, subject to any conditions on the existing consent. Building works, accessibility, ventilation and infection control standards still need to be met, and alterations may need building regulations approval.
For lenders, a building being fitted out for healthcare is valued on its current state, with the completed, let or occupied value supporting the exit. A refurbishment bridging loan can fund fit-out works, and our page on change of use bridging finance covers moves such as office to clinic. Confirm the planning position with a planning consultant.
Common healthcare bridging deals and exits
Deal
Why bridge
Typical exit
Practice buying its premises from retiring partners or a landlord
Vendor wants a fast completion
Owner-occupier commercial mortgage
Investor buying a let surgery or clinic
Competitive sale or auction timetable
Commercial investment mortgage
Dental or vet group buying a building to relocate or expand
Secure the building ahead of fit-out
Owner-occupier mortgage once trading from the site
Converting an office or shop to a clinic
Fund purchase and fit-out before an operator lease starts
Is there a cheaper alternative, and what are the downsides?
Medical property bridging finance makes sense when timing, vacancy or works rule out a commercial mortgage. If none apply, a term mortgage from a healthcare lender will usually be cheaper. The downsides of a bridge are higher monthly cost, fees charged upfront or added to the loan, and the full balance falling due at the end of the term. If an exit is delayed by a lease negotiation or a fit-out, extension fees or default interest can follow. See our guide to alternatives to bridging loans.
Cost, structure and regulation
Medical property bridging finance is priced per month, with pricing linked to LTV, covenant and exit strength. Budget for an arrangement fee of typically around 1% to 2% of the loan, monthly interest (retained, rolled up or serviced), a specialist valuation fee, legal fees and, with some lenders, an exit fee. Practices often borrow through a partnership, LLP or limited company, and personal guarantees are usual. Model the total with the bridging cost calculator.
Medical property bridging finance on premises held for business or investment purposes is unregulated, and we arrange it directly. Where you or an immediate family member will live in a flat above the practice, the loan may be regulated, so we introduce it to a firm directly authorised by the Financial Conduct Authority.
Unregulated commercial and investment bridging is arranged directly. Any case where the security includes a home you or an immediate family member occupies, including a flat above commercial premises, may be regulated and is introduced to a firm directly authorised by the Financial Conduct Authority. We are not directly authorised by the Financial Conduct Authority ourselves. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
It depends on the monthly rate, the term and the fees. As an illustration, an arrangement fee of 1% to 2% on £200,000 is £2,000 to £4,000, plus monthly interest for each month the loan runs, valuation and legal fees, and any exit fee. Our bridging cost calculator shows the total for your term and interest option.
What does Martin Lewis say about bridging loans?
We cannot speak for any commentator. Our view is that bridging is short-term, relatively expensive finance, and it makes sense only when you have a firm plan to repay it. For healthcare property, that means: bridge where timing or works require it, with a clear route to a term mortgage or sale.
Is there a cheaper alternative to a bridging loan?
Usually, if you have time. Healthcare premises with a good lease or an established practice can often be funded with a commercial mortgage, which costs less over the long term. Other options include a delayed completion, vendor finance from retiring partners or a second charge loan. A bridge earns its cost where speed or vacancy rules those out.
What are the downsides of a bridging loan?
Bridging costs more per month than term finance, fees are charged upfront or added to the loan, and the balance is repaid in one sum at the end. If a lease, fit-out or regulatory approval takes longer than planned, you pay for the extra time and may face extension fees or default interest.
Can I use bridging finance to buy a dental practice?
A bridge can fund the property element of a dental practice purchase. The goodwill, which is often a large part of the price, is not property security and is usually funded by a specialist bank. Lenders will look at the property's value, its suitability for other occupiers and your plan to refinance onto a term mortgage.
