Commercial Lease Terms For Allied Health Clinics

Finding the right premises for your allied health clinic is exciting. You can picture the reception area, the treatment rooms, the flow of clients and the kind of practice you want to build.

But before you sign, the lease needs a careful look. A commercial lease for an allied health clinic isn't just about rent and lease length. It can affect how you fit out rooms, protect patient privacy, display signage, manage waste, share rooms with other practitioners and exit the premises later.

The good news is that these issues are usually manageable if you spot them early, before you're locked into a deal.

Is An Allied Health Clinic Lease A Retail Lease?

It depends on your state or territory, the premises and the services you provide. Some allied health clinic leases are covered by retail lease laws, even where the premises don't feel like a traditional shop.

Retail leasing laws are state-based. For example, New South Wales has the Retail Leases Act 1994, Victoria has the Retail Leases Act 2003, and Queensland has the Retail Shop Leases Act 1994. These laws can apply to healthcare and allied health premises in certain situations, such as where you're in a shopping centre or providing services directly to the public.

If your lease is a retail lease, you may get extra protections around:

• Disclosure: the landlord may need to give you a disclosure statement before you enter the lease.
• Outgoings: you may only have to pay certain outgoings if they're properly disclosed.
• Key money: retail lease laws often restrict landlords from charging certain upfront payments just for granting the lease.
• Dispute processes: retail lease disputes often go through state small business or retail tenancy processes before formal proceedings.

The timing and content of retail lease disclosure statements differ by state. In several states, disclosure must be given before signing, and the exact deadline can matter. If you're reviewing a retail lease for a healthcare clinic, check the rules in your state before you sign or pay a non-refundable deposit.

If the lease is for more than 3 years, including any option term, lease registration may also be relevant in some states, such as NSW. Registration can help protect your lease if the property is sold.

What Permitted Use Should Your Clinic Lease Include?

Your permitted use should be broad enough to cover what you do now and what you may reasonably add later. If it's too narrow, you may need the landlord's consent each time your services change.

The permitted use clause is one of the most important clauses in an allied health clinic lease. It tells you what activities you're allowed to run from the premises. A narrow clause like physiotherapy clinic only may cause problems if you later bring in a psychologist, podiatrist, dietitian or exercise physiologist.

A more practical permitted use might cover:

• physiotherapy, psychology, podiatry, occupational therapy, exercise physiology and other allied health services
• consulting rooms, treatment rooms and rehabilitation services
• telehealth appointments and related administration
• group education sessions or small exercise programs, if relevant
• sale of incidental health products, braces, supports or rehabilitation items
• use by employees, contractors, visiting practitioners and approved subtenants or licensees

You'll also want to check the lease against planning approvals and council zoning. A landlord's consent doesn't automatically mean the local council permits the use. For example, premises approved for office use may need approval before they can operate as a health consulting room or medical centre.

If you're a registered health practitioner, advertising and service descriptions also need to line up with the rules that apply to your profession. The Australian Health Practitioner Regulation Agency and the National Law regulate advertising for registered practitioners. The Australian Consumer Law also applies, so your signage and marketing can't be misleading.

Who Pays For Fitout, Treatment Rooms And Building Works?

The lease should clearly say who pays for fitout, who owns the fitout and what happens to it when you leave. Clinic fitouts can be expensive, so vague wording can become a real problem.

Allied health premises often need more than a fresh coat of paint. You may need treatment room walls, basins, soundproofing, accessible pathways, reception joinery, flooring, lighting, storage, data cabling, privacy screens, clinical waste areas, practitioner rooms and sometimes changes to air conditioning or plumbing.

Before signing, check whether the lease deals with:

• Landlord works: what the landlord must complete before you get access, such as base building works, services or disability access upgrades.
• Your fitout works: what approvals you need before installing walls, sinks, signage, flooring, fixtures and treatment equipment.
• Timing: when you can access the premises, when rent starts and whether you get a rent-free fitout period.
• Make good: whether you must remove your fitout and return the premises to an empty shell at the end.
• Compliance: who is responsible for building code, fire safety, council approvals and accessibility requirements.

Example: A Fitout Cost That Changes The Deal

Say Mia opens a podiatry and physiotherapy clinic in Newcastle. The rent is $6,000 per month plus GST, and she gets a 3-month rent-free period for fitout. Her fitout costs $85,000 because she needs 4 treatment rooms, vinyl flooring, plumbing for a treatment area and soundproofing between rooms.

The lease also says she must make good the premises to base building condition at the end of the term. Her builder estimates that removal could cost another $25,000. If Mia signs without changing the clause, her real premises cost isn't just rent and fitout. It also includes a potential exit cost.

A better position may be to negotiate that landlord-approved fitout can stay, or that make good is capped or limited to removing loose fixtures and repairing damage. The right wording depends on the premises and the landlord's plans.

Can You Sublet Rooms To Other Practitioners?

Usually, only if the lease allows it or the landlord gives consent. You shouldn't assume you can rent out spare rooms to other practitioners just because you control the premises.

Many allied health clinics grow by bringing in contractors, visiting practitioners or other allied health businesses. That can work well, but your lease needs to match your operating model.

There are a few different arrangements you might use:

• Employees: they work for your clinic, and you stay responsible for the premises.
• Independent contractors: they provide services through your clinic under a contractor agreement.
• Room licences: they use a room at certain times, usually with limited rights to occupy.
• Subleases: they lease a defined part of the premises, often with stronger occupancy rights.

Your lease may prohibit assignment, subletting or licensing without landlord consent or a formal landlord consent deed. Some leases also restrict who can occupy the premises, even casually. If you plan to have practitioners use rooms under their own ABN, ask for this to be allowed clearly.

You'll also need the right documents with those practitioners. A room licence, commercial sublease agreement or practitioner agreement should cover fees, rosters, access, client ownership, insurance, privacy, records, cancellations, equipment use, professional registration, complaints and exit rights.

This is also where privacy becomes practical. If a psychologist, physiotherapist and podiatrist share reception systems or rooms, your agreements should make clear who controls health records and how information is stored. Private health service providers are generally covered by the Privacy Act 1988 and the Australian Privacy Principles, even if their annual turnover is under $3 million.

What Clinic-Specific Rules Should You Check Before Signing?

You should check the rules that affect your day-to-day clinic operations, not just the rent schedule. Small clauses can have a big impact once patients start coming through the door.

Privacy And Landlord Access

Landlords usually want a right to enter for inspections, repairs and emergencies. That's normal, but the clause should work for a clinic setting.

You may need wording that requires reasonable notice, entry during appropriate times where possible, and care around confidential information. Your landlord and contractors shouldn't be able to see patient files, screens, treatment notes or private consultations unless there's a genuine emergency.

If you're covered by the Notifiable Data Breaches scheme under the Privacy Act, you generally need to assess a suspected eligible data breach within 30 days after becoming aware of it. That's another reason to keep records, access permissions and physical security tight from day one.

Signage, Directories And Street Visibility

Signage can be crucial for a new clinic. Check whether you can install external signage, window decals, directory board listings, wayfinding signs and parking signs.

You may need landlord approval, owners corporation approval or council approval. If you're in a shopping centre or mixed-use building, signage rules may be strict.

Waste, Sharps And Clinical Materials

Some allied health clinics generate clinical waste, sharps or contaminated materials. Your lease should allow you to store and remove waste safely, and you may need a licensed waste contractor depending on your services and state rules.

Also check whether bins, waste rooms and collection times suit your operations. A general office waste clause may not be enough for a clinic using sharps containers or treatment consumables.

Accessibility And Patient Flow

Allied health clinics often see patients with mobility issues, injuries, disability or pain. The Disability Discrimination Act 1992, the Disability Access to Premises Standards and building rules can all be relevant.

Before signing, check entries, lifts, door widths, corridors, accessible bathrooms, parking, ramps and treatment room access. If upgrades are needed, the lease should say who pays.

Commercial Lease Checklist For Allied Health Clinics

A good lease review starts with your actual clinic model. Don't review the lease as if you're opening a generic office, because your risks are different.

Before you sign, work through this checklist:

• Confirm the tenant name, ABN or ACN, and whether you're signing personally or through a company.
• Check whether the lease is a retail lease under your state or territory laws.
• Match the permitted use to your current and future allied health services.
• Confirm council zoning, planning approvals and any use approvals needed for a clinic.
• List all fitout works, who approves them, who pays and when rent starts.
• Review make good carefully, especially if your fitout is expensive or built into the premises.
• Check signage, parking, waste, accessibility and after-hours access.
• Confirm whether you can use employees, contractors, room licensees or subtenants.
• Review outgoings, rent reviews, incentives, security deposit or bank guarantee and option terms.
• Check insurance requirements, including public liability, professional indemnity and plate glass if required.

Lease Term Sheet Outline

If you're still negotiating heads of agreement, an agreement for lease or a term sheet, you can use this outline to capture the key points. It isn't a finished legal document, and a lawyer should tailor it before you rely on it.

1. Parties: write the landlord's legal name and your tenant entity, including ABN or ACN.
2. Premises: identify the exact suite, rooms, car parks, storage areas and shared facilities.
3. Permitted Use: describe all allied health services, consulting, telehealth, administration and incidental product sales.
4. Term And Options: state the starting term, any option terms and the latest date to exercise each option.
5. Rent And Reviews: set out rent, GST, review method and review dates.
6. Incentives: record rent-free periods, fitout contributions and when each incentive is received.
7. Outgoings: list what you pay, what is excluded and how estimates and reconciliations are handled.
8. Fitout Works: attach plans, approvals, timing, contractor access and responsibility for compliance.
9. Subletting And Room Use: allow employees, contractors, licensees and approved practitioners if that's part of your model.
10. Clinic Operations: cover signage, privacy, waste, accessibility, hours, parking and building rules.
11. End Of Lease: deal with make good, removal of equipment, handover and return of security.

Free templates can be useful for organising your thoughts, but they often miss clinic-specific issues like privacy, practitioner room use and make good for treatment room fitouts.

Key Takeaways

• An allied health clinic lease may be a retail lease, depending on your state, premises and services.
• Your permitted use should cover your current services and realistic future growth, including other practitioners and telehealth.
• Fitout clauses matter because treatment rooms, plumbing, soundproofing and make good can add significant cost.
• If you plan to share rooms or bring in contractors, make sure the lease and practitioner agreements allow that model.
• Privacy, signage, clinical waste, accessibility and patient access should be checked before you sign.
• A tailored lease review can help you negotiate the practical points before they become expensive problems.

If you'd like help with reviewing your clinic lease, negotiating fitout and make good terms, or setting up practitioner room licence agreements, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.