Healthcare Property – Understanding the Permitted Use

More medical centres are opening across the country, driven largely because of a rise in the demand for healthcare, including due to health awareness and an ageing population. Inevitably, this is causing more growth and demand in the healthcare property market.

If you are looking to acquire a property or enter into a lease (or sub-lease) for healthcare property, there are certain things that should be considered to ensure that you can use the premises for the intended purpose.

Medical practitioners and allied health professionals who are looking to start their own business and lease a premises for the purpose of a medical centre will need to carefully consider the following:

1. Healthcare Property Leasing Requirements:

Understanding the permitted use contained in the Heads of Agreement, Terms Sheet or Lease is critical to enable you to run your business from the premises in an authorised manner. The “permitted use” is how you are allowed to use the property during the term of the lease. For example, the permitted use in a Lease might be quite broad and say 'medical centre’ or ‘office.’ Alternatively, it may be quite narrow and say for example, ‘physiotherapist clinic’ or ‘Pathology collection centre’. It is important to consider whether a broad or narrow permitted use is agreed to during negotiations and ultimately incorporated into a Lease as, if you decide to assign or transfer the Lease at any time in the future, any assignee or transferee will only be able to use the property for this use unless otherwise agreed. What should be included as your permitted use will also be dependent on your present and longer-term business goals.

2. Healthcare Property Planning Requirements:

You will also need to consider whether you are permitted to use the premises for the permitted use under the local planning scheme.

Depending on the planning scheme relevant to the premises and despite what may be stated in the Lease, the premises may be able to be used for the proposed purpose as of right (without a planning permit), with a planning permit in place or, it may be prohibited depending on the planning controls affecting the specific location of the premises. Importantly just because a permit can be granted, does not suggest that a permit should or will be granted by the Council.

Additionally, there may be further planning requirements outside of the use of the premises, that will need to be complied with. You should not assume that any right to operate a medical centre satisfactorily addresses car parking requirements, signage or development and such planning requirements should be considered separately.

Ensuring that you can use premises as a medical centre or for any ancillary purpose is critical to your business success and we would recommend that you carry out sufficient due diligence on planning requirements prior to entering into a Lease or, alternatively, having a means to exit the Lease if you are ultimately not able to use the property as intended.

If you would like us to review a proposed lease, assist in negotiations or advise further on planning requirements to ensure the relevant property can be used for its intended purpose, please contact one of our property lawyers to find out how they can help you.

Contact us today on +61 3 9822 8588 or email us HERE.

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