Securing the right location is one of the biggest decisions you will make when establishing a Medical, Dental, Radiology, or Allied Health clinic in Melbourne. However, many healthcare business owners rush into signing leases without understanding the fine print, which can lead to costly disputes, renovation delays, and compliance headaches down the track.
At SoulMed, we frequently assist healthcare practitioners navigating lease negotiations to ensure your tenancy supports your operational goals and fit-out requirements.
Here’s a detailed guide on what to look out for before signing a lease in Melbourne, Victoria:
1. Zoning and Permits
Check that the property is zoned for medical, dental, or allied health use under the local planning scheme. Do not assume a property can be used for healthcare just because it was previously a consulting space.
Key actions:
- Request a zoning certificate from the local council.
- Confirm if a planning permit is required for your use.
- Check car parking requirements specific to medical use under the planning scheme.
2. Landlord Fit-Out Approvals
Most leases require landlord consent for any works, including your clinic fit-out. This affects your timeline and budget if you are planning a full medical renovation.
Questions to ask:
- Is landlord consent required for your proposed works?
- Does the lease clearly outline the approval process?
- Can you secure early access for design and builder site assessments before lease commencement?
3. Make Good Obligations
“Make good” clauses require tenants to return the premises to its original condition at the end of the lease. This can include removing partitions, reinstating original finishes, or other costly works.
Actions:
- Clarify what “make good” means in your lease.
- Negotiate to leave fit-out in place if it adds value.
- Document the condition of the premises at the start with a photographic condition report.
4. Outgoings and Hidden Costs
Outgoings can add 10–20% to your base rent and include:
- Council rates
- Land tax (unless it’s a retail lease where the landlord pays)
- Building insurance
- Maintenance of common areas
Tip: Request an outgoings budget and confirm which costs you will pay, ensuring transparency before signing.
5. Rent Reviews and Lease Increases
Understand when and how your rent will increase. Lease agreements typically include:
- Fixed increases (e.g., 3–4% annually)
- CPI increases
- Market rent reviews at specific intervals
Plan your cash flow by modelling these increases over your lease term.
6. Term, Options, and Flexibility
The lease length (term) and options for renewal impact your clinic’s stability and growth potential.
Checklist:
- Ensure sufficient term to recoup your fit-out investment.
- Secure renewal options to protect goodwill and patient flow.
- Align lease expiry with your business growth and future plans.
7. Building Compliance and Essential Safety Measures
Before signing, check that the premises comply with:
- Fire safety standards (including egress paths and alarms)
- Disability Discrimination Act (DDA) compliance for accessibility
- Essential safety measures testing and maintenance
If upgrades are required, confirm who will bear these costs.
8. Car Parking and Accessibility
Assess:
- Availability of onsite or nearby parking for patients and staff
- Accessibility for patients with mobility challenges
- Signage opportunities for patient visibility
9. Exclusivity Clauses
If you are a specialist, consider negotiating exclusivity to prevent the landlord from leasing to competing practitioners within the same complex, protecting your patient pipeline.
10. Early Access and Rent-Free Periods
Negotiate early access for fit-out and potential rent-free periods to offset your capital outlay during the non-operational phase.
11. Personal Guarantees
Landlords may request personal guarantees from directors of a corporate tenant. Understand your risk exposure, and seek advice on minimising personal liability where possible.
Final Tips:
- Engage a lawyer experienced in Victorian commercial leasing to review your lease and negotiate terms that align with your healthcare practice’s needs.
- Ensure your fit-out contractor (like SoulMed) reviews the lease before signing, ensuring it aligns with your design, construction, and operational requirements.
- Do not rush – clarifying these issues upfront can save thousands and prevent operational disruptions.
If you’re planning a Medical, Dental, Radiology, or Allied Health clinic fit-out in Melbourne, SoulMed can assist you in aligning your lease, design, and operational needs to minimise risk and maximise your investment.
