What follows is not legal advice. It is a series of short think pieces for doctors, dentists and healthcare entrepreneurs in New South Wales looking to renew or improve on their premises lease. 

The end of lease trap

10 July 2024

Tenants who spend hundreds of thousands of dollars (if not millions) on specialised fit outs and years generating location specific goodwill are unlikely to be enticed to move by cheaper rents up the road.

Who then has more power at the end of the lease ?

A tenant who wants to stay beyond the end of the lease is toast. Stuck, the tenant is forced to seek and agree to new terms with the landlord to preserve its business, or to vacate. If a new deal is struck, it is usually with a significant rental increase.

The best way for a tenant to avoid the trap is to anticipate and plan for it before signing the lease. The next best way is to focus on things within the tenant’s control – mindset, behaviour and positioning. These can provide tenant with much needed leverage in an otherwise powerless situation.

Self help

28 June 2024

If unsure, the most immediately constructive thing a tenant can do, is find a copy of the lease and check two things. The first is the expiry date. The second is whether it has any option rights, that is, the option to extend the lease. This is sometimes called a right of renewal.

If a tenant has a right of renewal, it can call upon the landlord to extend the length of the lease in accordance with the renewal mechanism. If there are no rights of renewal, then the lease ends when it ends.

At the end of a lease, a tenant must cease to trade, vacate the premises, remove its fitout and make good the premises returning them the landlord in the condition required by the lease. It is game over.

If a tenant needs to secure the operation of its practice beyond the end of the lease, it needs time to negotiate a reset of the lease.

Never enough time

27 June 2024

A tenant can never have enough time to overcome a whole-of-business challenge. A lease renewal is an opportunity to reset or secure the future of a healthcare practice. When faced with a renewal or end of lease reality, the troubleshooting guide calls for time. A lot of time.