What should you charge to rent out a treatment room?

Most practices price a spare room the way you price a second-hand car to a friend: somewhere between what feels fair and what you think they will pay. Then it stays at that number for four years.

The number is knowable. It takes about twenty minutes and a spreadsheet, and once you have it you will find the room is either earning more than you thought or costing you more than you realised. Both are useful.

I am a Chartered Accountant and I co-own a clinic, so this is the arithmetic I would actually run — not a rule of thumb.

Start with what a room costs you per day

Take every cost of having premises at all, for a year. Not staff, not consumables — the costs that exist because the building exists:

• rent
• business rates
• utilities
• buildings and contents insurance
• cleaning and waste
• alarm, monitoring, maintenance

Say that comes to £40,200 across a three-room practice. Divide by the number of treatment rooms: £13,400 per room per year.

Now divide by the days you are actually open. Five days a week, allowing for closures and holidays, is roughly 240 days. So:

£13,400 ÷ 240 = £55.83 of fixed cost sitting in each room, every working day, whether anyone is in it or not.

That is the first number worth knowing, and most owners have never calculated it. It is what an empty Tuesday costs you.

Then work out what an extra day actually costs

Here is where most people go wrong, in both directions.

The £55.83 is already spent. The room is heated, insured and rated whether a visiting practitioner uses it or not. So it is not what letting the room costs you. What letting the room costs you is only the things that would not happen otherwise:

Reception time is the one people forget, and it is usually the largest. Someone greets their patients, answers their phone calls, takes their deliveries and unlocks the door. That is real staff cost and it does not disappear because the person in the room is self-employed.

So your genuine floor is around £45 a day. Below that you are paying someone to use your room.

But do not price at the floor

This is the trap, and it is why the two numbers matter separately.

Marginal cost tells you the point below which a let makes you poorer. It does not tell you what to charge. If you let every spare day at £50 because "it is better than empty", you never recover the £55.83 that the room costs on the days you use it — and you have quietly converted a clinical asset into a break-even sideline.

Use the numbers like this:

• £45 is the floor. Never go below it.
• £55.83 tells you whether the room is worth having at all. If you cannot get meaningfully above it, the honest question is whether you need three rooms.
• The market rate is what you charge.

UK treatment room rates vary enormously by location and fit-out — a chair in a fitted dental surgery is not a room with a couch and a sink. Find three comparable rooms within a sensible radius and price against them, not against your costs. Costs tell you your floor; the market tells you your price.

What it is actually worth

Say you land at £120 a day. Contribution is £120 − £45 = £75 a day.

Let one room two days a week, 48 weeks a year:

96 days × £75 = £7,200 a year, from a room you are already paying for.

That is the whole argument. It is not a new revenue line requiring investment, marketing or risk. It is the removal of a cost you are already carrying.

Two rooms at two days each is £14,400. For most independent practices that is more than a year of cost-cutting will find you anywhere else on the P&L.

Four things that will cost you more than the rent

Charging a percentage of their turnover instead of a day rate. It sounds fairer and aligned. In practice you cannot verify their takings without becoming their bookkeeper, the number arrives late, and it starts to look like a profit share rather than a letting — which drags you towards the employment-status question below. Day rates are boring and boring is correct.

Not charging for the turnaround. If they finish at six and your nurse cleans down at six fifteen, that is your cost. Either build it into the rate or bill it separately, but do not absorb it silently.

Assuming the room being used means the room being worth it. Utilisation is not profitability. A room let five days a week at £50 is worse than one let two days a week at £120, and looks busier.

Forgetting the VAT position. This is the one that catches people, and it is worth proper advice rather than a blog post. A bare letting of land is normally exempt from VAT. But the moment you are supplying facilities rather than space — reception cover, sterilisation, nursing support, laundry, use of equipment — HMRC may treat it as a standard-rated supply of services rather than an exempt letting. If you are VAT registered and you have been treating room income as exempt when it is really a serviced supply, that is a liability accruing quietly in the background. Ask your accountant before you sign anything, not after.

And the one that is genuinely serious

If the person renting your room looks like an employee, HMRC may decide they are one — regardless of what your agreement says. The factors are the familiar ones: who controls the diary, who owns the patient relationship, whether they can send a substitute, who supplies materials, whether they carry any financial risk.

This is live territory in dentistry in particular, since HMRC withdrew the long-standing treatment for associates, and it is not a theoretical exposure. If your arrangement gives you control over hours, patients and pricing, you may have an employment relationship with a rent invoice attached to it.

Get the agreement drafted properly. It is a few hundred pounds against a risk measured in years of PAYE and NIC.

The twenty-minute version

1. Add up annual premises costs. Divide by rooms, then by working days. That is your fixed cost per room-day.
2. Add up what one extra occupied day genuinely costs — utilities, cleaning, reception time. That is your floor.
3. Find three comparable local rooms. That is your price.
4. Multiply contribution by realistic days. That is the prize.
5. Speak to your accountant about VAT, and get the agreement written properly.

An empty room does not announce itself. It costs you £55 a day in silence, and it will keep doing so for as long as nobody does the arithmetic.