Shared spaces: Considerations for care homes and on-site providers
What should you consider when you’re thinking about sharing care home premises with another provider? And, crucially, could a licence be construed as a business tenancy?
As the cost and complexities of providing care increase, some care home operators are considering the advantages of sharing their space and premises with dedicated on-site specific providers of care or support.
Two legal mechanisms that are typically used for allowing occupation of a space within a premises are licences and business tenancies.
A licence is usually a popular choice with its typical flexibility allowing for short term arrangements, easy termination and lower setup and administrative costs. This can help care home providers keep an element of control and reduce their exposure to any potential risks.
In an age where the healthcare landscape is ever-changing, this approach can allow for the ability to introduce, test and remove specialist providers, additional technologies or specific resident wellbeing facilities, without long term commitment. This may appeal to providers looking at ways to provide dynamic and responsive environments at the forefront of resident care.
The alternative is a business tenancy. A business tenancy is less flexible but provides more security for both the landlord and the tenant and potentially demonstrates commitment to consistent high quality care delivery.
Typically, business tenancies require tenants to share costs more formally, for example by contributing to services or paying business and utility rates. However, when granting a business tenancy, landlords need to ensure occupants do not acquire a statutory right to remain at the premises once the existing lease has expired. We call this ‘security of tenure’.
Security of tenure can be acquired even when the parties intend to grant a licence, so it is important to seek legal advice when considering a licence of a shared space, to avoid inadvertently granting security of tenure to the occupant.
A clear written agreement explicitly stating that a licence is being created incorporating specific licence characteristics is a key starting point. The shared space and facilities should be well-defined, and the termination provisions must be plain and clear.
Care home providers should consider ways in which they can maintain active control and safeguard the genuine sharing of spaces. This may include retaining master keys, ensuring regular inspections take place, exercising rights to periodically relocate the space, and not allowing licensees to install permanent fixtures or workstations. Special care should be taken to ensure that actual licence features are not lost.
The decision between the two approaches and how they are implemented can have far-reaching implications so a provider should carefully consider their own operational requirements, resident demographics and strategic objectives. Providers should always seek legal advice before entering any occupancy arrangements.
Contact Gemma to discuss this further.
