Leasing Medical Premises in Victoria: A Guide for GPs, Dentists and Allied Health

Medical and allied health tenancies are unlike most commercial leases. The fit-out is expensive and specialised, the premises often need a planning permit for their use, patient access and parking are regulatory as well as commercial questions, and the practice may one day be sold with the lease as its most valuable asset. This guide covers what GPs, specialists, dentists, physiotherapists, psychologists, radiology and pathology providers should look for before signing a lease in Victoria.

Does the Retail Leases Act apply to a medical practice?

Usually, yes — and many landlords and tenants are surprised by this. The Retail Leases Act 2003 covers premises used wholly or predominantly for the supply of services to the public. Victorian tribunals have repeatedly held that medical, dental and allied health practices that see members of the public fall within the Act, even in office buildings. That brings a set of protections the landlord cannot exclude: a disclosure statement at least 14 days before signing, a minimum five-year term, no recovery of land tax, restrictions on rent review methods, and mediation through the Victorian Small Business Commission before any tribunal dispute. There are exceptions, most notably where annual occupancy costs exceed the Act’s threshold, which can happen with large specialist suites or imaging centres. Establish this first, because it decides how the whole lease is negotiated.

Planning: “medical centre” is a defined use

Under Victorian planning schemes a “medical centre” is a specific land use, and in many residential and some commercial zones it requires a planning permit, with conditions on the number of practitioners, hours, car parking and signage. A lease that assumes you can operate as a medical centre in premises that are permitted only as an office is a lease for premises you cannot lawfully use. Before signing, confirm the existing permit (or the zoning that allows the use without one), check the practitioner cap, and make the lease conditional on any permit you still need. Car parking rates for medical centres are set by the planning scheme and are higher than for offices — a permit can be refused on parking alone.

Permitted use: write it wide

The permitted use clause should cover everything the practice does now and is likely to do: consulting, treatment rooms, pathology collection, allied health, telehealth, pharmacy or dispensing if relevant, imaging, minor procedures, and the ability to add or change practitioner types. “Medical consulting rooms” alone will not cover a co-located physio or a skin cancer clinic performing procedures, and a landlord can use a narrow clause to refuse consent, or to charge for it, when the practice evolves.

Fit-out: the expensive part

Medical fit-outs commonly run into the hundreds of thousands of dollars — plumbing to every consulting room, medical gas, reinforced floors and radiation shielding for imaging equipment, dental chairs and suction, sterilisation rooms, accessible toilets, and HVAC that meets clinical standards. The lease needs to address: who does and pays for base building upgrades (electrical capacity, plumbing risers, structural loading); landlord approval of your fit-out drawings and the time allowed; whether the landlord contributes; and, critically, what happens to it all at the end (see make good below). Ask for a rent-free fit-out period that reflects the real construction timeline, and make sure the lease does not start before you can occupy.

Term and options: match the lease to the investment

A fit-out of that scale is amortised over a long period. A five-year initial term with two five-year options is a common medical structure; some practices negotiate ten-plus-five. Options are exercised in a strict window — the landlord must now remind you at least three months before it closes, but the obligation to act is yours. Also negotiate what happens to rent at option: an early market review mechanism lets you know the new rent before you commit.

Assignment: the lease is part of the practice

When a practice is sold, the buyer needs the lease. Confirm that assignment to a purchaser of the business is permitted with consent not to be unreasonably withheld, that the landlord’s costs of consent are capped, and — most importantly — that the outgoing practitioners’ personal guarantees are released on assignment. Consider also a clause allowing changes to the partners or shareholders of the tenant entity without triggering an assignment, since practice ownership often changes over a long lease.

Access, hours and the building around you

Patients need to get in. Check after-hours access for the practice and for patients, lift and accessibility compliance, signage rights at street level and in the lobby, patient parking arrangements and drop-off, and whether the landlord can restrict hours. If you rely on shared building services — air conditioning that switches off at 6pm, for instance — get an agreement on extended hours and the cost.

Make good

The end-of-lease clause that costs medical tenants most. A strict make-good obligation can require removing every fixture you installed — plumbing, partitions, shielding — and reinstating the shell, at a cost that can rival the original fit-out. Negotiate now for the right to leave the fit-out in place (a medical fit-out has value to the next medical tenant), or for a capped make-good payment instead of works. Record the condition at handover with dated photographs.

Relocation, demolition and redevelopment

Clauses allowing the landlord to move you within the building or terminate for redevelopment are dangerous for a practice with a fixed patient base and an immovable fit-out. Under a retail lease you are entitled to notice and compensation, but compensation rarely covers the loss of a practice’s location. Try to have these clauses removed or, at minimum, limited to circumstances the landlord must prove, with compensation that reflects the actual fit-out cost.

Privacy, records and the premises

Consulting rooms need acoustic privacy — a legal as well as a clinical requirement. A lease that allows the landlord to alter partitions or reduce the premises, or that provides no soundproofing standard, can leave you non-compliant. If you store paper records or servers on site, check access and security provisions and what happens to them if the landlord exercises a right of entry.

Empower Legal Solutions reviews and negotiates leases for medical, dental and allied health practices across Melbourne. We disclose pricing before we start and read the whole document, not just the rent schedule. Book a free first consultation or see our property and leasing page.

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