Leasing vs Buying: What's Right for Your Health Practice?

The Big Decision

For many health practitioners, the decision to lease or buy their practice premises is one of the biggest financial commitments they'll make. Both options have significant advantages and trade-offs, and the right choice depends on your financial position, growth plans, and risk appetite.

Leasing: Flexibility and Lower Entry Cost

Leasing is the most common approach for health practitioners, especially those starting out or growing. Key advantages include:

• Lower upfront cost: You'll need a bond (typically 3–6 months' rent) and fitout costs, but no property deposit. This preserves capital for equipment, staff, and marketing.
• Flexibility: Lease terms of 3–10 years allow you to relocate or expand as your practice grows. You're not locked into a property that may not suit your needs in 5 years.
• Tax advantages: Lease payments are fully tax-deductible as a business expense. Fitout costs can be depreciated over the lease term.
• Landlord maintenance: Structural maintenance, building insurance, and common area upkeep are typically the landlord's responsibility.

Leasing Risks

• Rent increases: Fixed annual increases (typically 3–4%) or market reviews can push up costs. Over a 10-year period, rent may increase by 30–50%.
• Make-good obligations: At lease end, you may be required to return the space to its original condition — which can cost $200–$500/sqm.
• No equity: Rent payments build no ownership stake in the property.
• Relocation risk: If the landlord doesn't renew your lease, you may need to relocate — potentially losing patients and brand equity.

Buying: Equity and Long-Term Security

Buying your premises provides certainty and wealth-building, but requires significant capital. Key advantages:

• Equity growth: Property ownership builds wealth over time. Commercial property in healthcare precincts has historically appreciated steadily.
• Security of tenure: No risk of lease non-renewal. You control the property for as long as you own it.
• Stable costs: No rent increases — your mortgage repayments are predictable (if fixed rate) and eventually end.
• Rental income potential: If you buy a larger property, you can lease excess space to other practitioners for additional income.

Buying Risks

• Large capital requirement: Commercial property deposits are typically 20–30% of the purchase price, plus stamp duty, legal fees, and fitout costs.
• Reduced flexibility: Selling commercial property takes time. If your practice outgrows the space or the area declines, you're less mobile.
• Maintenance responsibility: All building maintenance, insurance, and capital works are your responsibility.
• Opportunity cost: Capital tied up in property could potentially earn higher returns invested in the practice itself — staff, equipment, marketing.

Which is Right for You?

As a general guide: lease if you're starting out, growing rapidly, or uncertain about your long-term location. Buy if you're established, plan to stay in one location for 10+ years, and have the capital without compromising practice investment.

Many practitioners eventually do both — leasing while they establish, then purchasing once the practice is stable and they have clear long-term plans.

Get Help Planning

Whether you lease or buy, the fitout decisions are the same. Use our space planner to understand your space needs and likely fitout costs before you commit to a property.