Key Takeaways
- Professional service practitioners (medical, legal, accounting, allied health) typically receive favourable commercial lender treatment because of strong, stable income, industry resilience, and high barriers to entry that protect against competitive disruption.
- Different lenders have different appetites for different professions; specialist lenders focused on healthcare or professional services often produce better terms than generalist major banks for the same borrower and property.
- Entity structure for premises ownership materially affects tax outcomes, asset protection, and succession planning; the right structure varies by profession, partnership arrangements, and broader wealth strategy.
- Practice premises ownership often becomes the strongest single wealth-building lever for established practitioners, building equity over the practice’s life and providing retirement assets alongside or instead of practice goodwill.
Why Professional Practices Are a Distinct Category
Professional service practices occupy a distinctive position in commercial property lending. The income streams of established practitioners are unusually stable compared to general business income; the industries (healthcare, legal, accounting, allied health) have substantial regulatory barriers to entry that protect existing practitioners from disruption; the borrowers themselves are typically well-credentialed and capable of meeting their commitments. These characteristics combine to produce favourable lending treatment that is not always extended to other business types.
Despite these advantages, professional practitioners often miss opportunities to optimise their commercial property finance because the property purchase is one of several major decisions made in a busy practice life. The right entity structure, lender choice, loan structure, and premises type all combine to produce outcomes that vary materially among practitioners with similar professional positions. Hence, this guide works through the specific considerations that professional practitioners face when buying their own premises, with attention to differences between professions and to the practical decisions that matter most.
This guide covers commercial property finance for medical practices, legal firms, accounting practices, and allied health practitioners who are considering purchasing their own clinic, consulting rooms, or office premises. The Loanworx team has worked with professional practices across medical, legal, accounting, and allied health and can help identify which lenders’ policies best suit the specific profession, practice structure, and property type being considered.
The Professional Advantage in Commercial Lending
Several characteristics make professional service practitioners attractive borrowers to most commercial lenders. Understanding these advantages helps practitioners present their applications to maximise the favourable treatment.
Stable, Predictable Income
Established professionals typically have income that is materially more stable than equivalent income from general trading businesses. A general practice medical doctor with 15 years of experience and a settled patient base has predictable bookings, predictable Medicare and private billing flows, and limited downside risk in normal market conditions. Lenders recognise this stability and typically apply lighter income shading and more generous serviceability assessments than they would to trading businesses with similar revenue.
Industry Resilience
Professional service industries (healthcare, legal, accounting, allied health) have historically been resilient through economic cycles. Demand for medical services, legal advice, accounting compliance, and allied health treatment is relatively counter-cyclical or at least cycle-resistant: people still need their medical, legal, and accounting needs met during recessions, sometimes more than during booms. This industry-level resilience reduces the lender’s perceived risk on individual practitioners.
Regulatory Barriers to Entry
Professional services typically require years of training, qualifications, registration, and continuing education before practitioners can operate. These barriers limit new competition and protect established practices from disruption. A medical practitioner with established premises and patient base is unusually well-positioned to maintain that position over 10-20 year holding periods, which is exactly the horizon commercial lenders are pricing against.
Credentialed Borrowers
Professional borrowers typically have strong personal credit histories, established financial discipline (developed through running compliant practices), and demonstrated ability to meet substantial commitments. Lenders assessing the borrower’s character alongside the deal often find professional borrowers to have a lower risk profile than the demographic average. This affects both the likelihood of approval and the terms achievable.
Owner-Occupier Profile
Most professional practices buying their own premises are owner-occupiers rather than pure investors. The practitioner uses the premises for their own practice operations, generating income from professional services rather than depending on third-party tenants. This owner-occupier profile is favourable from a lender’s perspective because vacancy risk is largely internalised; the practitioner’s commitment to the practice provides natural tenant security.
Profession by Profession Considerations
Each profession has specific characteristics that affect commercial property finance. Understanding the profession-specific considerations helps practitioners approach the property decision with appropriate context.
Medical Practices
Medical practices (GP surgeries, specialist consulting rooms, day surgeries) face specific considerations around premises layout (consulting rooms, reception, treatment rooms, accessibility), regulatory requirements (clinical waste, sterilisation, disability access), and tenancy permanence (medical practices typically don’t relocate easily because of patient base ties). Lenders specialising in medical premises typically support LVR up to 70% on standard owner-occupier purchases, with experienced operators sometimes achieving slightly higher. Day surgeries and specialist clinics with substantial equipment investment can attract specialised lending treatment with different LVR caps and pricing.
Legal Practices
Legal practices (solicitor offices, barristers’ chambers, specialist law firms) typically require professional office premises in metropolitan or large regional locations. The premises requirements are less specialised than medical (standard office fitout typically suffices), but location quality matters substantially for client perception and accessibility. Legal practitioners typically achieve favourable lender treatment due to high professional income and established practice models. Practice structures (sole practitioner, partnership, incorporated legal practice) vary considerably, affecting entity options for premises ownership.
Accounting Practices
Accounting practices (general accounting firms, specialist tax practices, advisory firms) operate from professional office premises similar to legal practices. The accounting industry has specific characteristics that lenders consider when assessing both the business and any purchase of premises. How lenders assess professional practice businesses for finance purposes explores how lenders value accounting practices as businesses, with the same principles informing their assessment of accounting practitioners purchasing their own premises. The combination of practice value assessment and premises lending often produces opportunities to structure transactions efficiently across both dimensions.
Allied Health
Allied health includes physiotherapy, chiropractic, podiatry, psychology, optometry, dental practice, and many other practitioner-based health services. Each has slightly different premises requirements (treatment rooms vs consulting rooms, equipment installation needs, accessibility considerations) and lender treatment. Dental practices often require substantial fitout investment ($150,000 to $500,000+ for new clinics), which makes ownership particularly compelling. Lenders specialising in allied health typically understand the profession’s economics and provide better terms than generalist commercial lenders.
Multi-Disciplinary Practices
Some practices combine multiple disciplines under one roof: medical practices with allied health, legal practices with related advisory services, and accounting practices with financial planning. These multi-disciplinary practices can be attractive to lenders because revenue is diversified across multiple service streams, reducing concentration risk. However, regulatory considerations (some professions cannot operate within shared structures) and operational complexity affect the structure choices. Specific advice on how the multi-disciplinary structure interacts with the property purchase is essential.
Property Types Typically Suiting Each Profession
Different professions typically operate from different property types. Understanding the typical fit helps practitioners efficiently identify suitable properties.
Standalone Clinic Buildings
Medical practices and larger allied health operations often suit standalone clinic buildings: purpose-built premises with consulting rooms, reception, treatment areas, and parking. These buildings typically range from $1.5 million to $5 million, depending on size and location. Standalone clinic buildings often have substantial fitout investment from previous occupants, which can be either an asset (existing infrastructure suits the new operator) or a liability (existing infrastructure needs renovation for the new operator’s purposes).
Strata Office Suites
Smaller practices (solo practitioners, partnerships of 2-3 practitioners) often suit strata office suites: individual office units within larger commercial buildings, with shared building amenities and dedicated parking. Strata suites typically range from $500,000 to $2 million, depending on size and location. They suit practices with limited fitout requirements (legal, accounting, psychology, and small medical specialties) and provide a cost-effective entry point to commercial property ownership.
Mixed-Use Buildings
Some practices operate from mixed-use commercial buildings: a single building combining the practice with related services or unrelated commercial tenants. A medical centre with allied health, a legal practice with related advisory services, or an accounting practice with financial planning can operate effectively from mixed-use buildings. The mixed-use structure provides revenue diversification through rental income from non-practice tenants, alongside the operating practice.
Specialist Healthcare Buildings
Day surgeries, dental practices, and specialist healthcare facilities sometimes operate from purpose-built specialist healthcare buildings. These have substantial specific fitout requirements (operating theatres, dental chairs, imaging equipment, sterilisation areas) that make them genuinely specialised assets. Lenders treat these properties more cautiously due to the narrower pool of potential buyers if the property needs to be sold, often capping LVR at 60%-65% rather than 70%.
Suburban Versus Metropolitan
Practice location preferences differ significantly. Metropolitan practices typically operate from higher-priced premises in established commercial precincts, which attract higher rents and support higher property values. Suburban practices often operate from smaller-scale premises with stronger residential connectivity (patient catchment, walk-in legal/accounting clients). Both can succeed financially; the lender treatment depends on the specific location’s broader commercial property market characteristics.
Entity Structures for Professional Practice Premises Ownership
How the premises ownership is structured significantly affects tax outcomes, asset protection, and long-term planning. The right structure varies by profession (some professions have regulatory restrictions on practice structure), partnership arrangements, and broader wealth strategy. Professional advice is essential before settlement.
Sole Practitioner Direct Ownership
Solo practitioners sometimes own their practice premises personally (in their own name). This is the simplest structure, but rarely the most tax-effective or asset-protected. Personal ownership exposes the property directly to creditors’ claims and offers limited tax-planning opportunities. Most professional advisers recommend more sophisticated structures, though personal ownership remains common for smaller, simpler practices.
Family Trust Ownership
Many professional practitioners own their premises through a family trust, with the practice (operating as a separate entity) leasing them at commercial rates. This structure provides asset protection, supports flexible income distribution, and aligns with broader family estate planning. The complexity is real, but typically justified for substantial premises purchases. Specific advice on the trust structure, beneficiary arrangements, and ongoing compliance is essential.
Self-Managed Superannuation Fund (SMSF)
SMSFs can purchase business premises and lease them to the practitioner’s practice, subject to specific superannuation rules. This structure provides tax benefits during the accumulation phase (lower tax on rental income within the SMSF), potential tax benefits in the pension phase, and natural alignment with retirement planning. The SMSF approach is particularly common among established practitioners with substantial existing super balances or those approaching retirement age. SMSF property investment has specific compliance requirements and limited financing options (LVR typically capped at 70% maximum, often less).
Pty Ltd Company Ownership
Some practitioners use a separate company to own the premises, with the practice leasing from the company. This structure provides legal separation between the practice and the property, supports planning for dividend distributions from rental income, and can be straightforward to administer. The flat company tax rate (currently 25-30%) provides predictable tax treatment but lacks the flexibility of trust structures for distributing income to family members.
Professional Practice Partnership Considerations
Where multiple practitioners are partners in the practice, premises ownership becomes more complex. Common arrangements include: each partner owning a share of the premises through their own entity, the practice partnership itself owning the premises (with implications for partner entry/exit), or a separate property-owning entity with the partners as ultimate beneficial owners. The right structure depends on the partnership’s specific dynamics, expected partner movements, and broader strategic plans. Engaging both an accountant and a solicitor familiar with professional practice structures is essential.
Income Assessment for Professional Practitioners
How lenders assess professional income for serviceability differs from how they assess general business income, typically in ways that favour the professional borrower.
Standard Trading History Requirements
Most commercial lenders require 2 years of trading history for established practices, although some accept 1 to 2 years for clearly viable practices with strong fundamentals. Newly graduated professionals starting their first practice typically need to demonstrate either substantial professional employment history (often in similar settings) or a strong personal financial position to support the first practice’s launch.
Income Recognition Patterns
Professional income flowing through various entity structures (sole trader, partnership, company, trust) is assessed on the practitioner’s underlying entitlement. For partnership distributions, the practitioner’s share is treated as their income. For company arrangements, salary plus dividends is assessed. For trust distributions, the underlying distribution to the practitioner is assessed. The specific assessment depends on the structure; lenders typically work with accountants to clarify the income picture.
Add-Backs Specific to Professional Practices
Professional practice EBITDA assessments often include specific add-backs that increase recognised income: one-off costs (practice setup, technology refresh, regulatory compliance updates), partner-replacement adjustments (where the owner-practitioner’s clinical or fee-earning time is being compared with market rates), and capital expenditure that exceeds long-term sustainable levels. A specialist commercial broker familiar with the profession can identify legitimate add-backs to maximise the assessment.
Multiple Income Streams
Many professional practitioners have multiple income streams: practice income, investment income, locum or consulting fees, teaching income, professional service contracts. Lenders typically combine these in the assessment, with each stream subject to its own treatment (regular employment income at 100%, investment income at 80% typical, irregular income at lower recognition). The combined position can provide strong borrowing power for practitioners with diversified income streams.
Locum Work and Variable Income
Some professionals (particularly in medical fields) earn substantial income from locum work, which is treated differently from employed or practice-based income. Lenders typically apply some shading to locum income (often 70%-80% recognition), reflecting its greater variability. Established locum practitioners with multi-year histories can sometimes achieve full recognition; newer locum arrangements typically face more conservative treatment. Documentation of locum arrangements over multiple years supports stronger income recognition.
Growth Planning for Professional Practices
Premises decisions interact with the practice’s growth trajectory. Different growth patterns suit different premises strategies, and practitioners should consider their realistic growth plans before committing to specific premises arrangements.
Solo Practitioner Stable Operations
Solo practitioners running stable practices with limited growth plans typically benefit from buying premises sized for their current and reasonably foreseeable operations. Buying premises larger than needed is expensive; buying premises smaller than needed creates pressure to relocate in the future. For stable solo practitioners, premises sized 10-20% above current needs typically provide a comfortable working space at a reasonable cost.
Solo Practitioner Planning to Add Associates
Solo practitioners planning to bring on associate practitioners face specific premises considerations. The premises need to accommodate additional practitioners (consulting rooms, treatment rooms, support staff), which typically requires substantially more space than the current operation. Buying premises sized for the future practice creates upfront over-capacity but avoids future relocation. Some practitioners use a phased approach: lease initially, then buy larger premises once the associate model is established.
Multi-Practitioner Growing Practice
Multi-practitioner practices with strong growth trajectories typically face the most complex premises decisions. The practice may need to expand from 3 practitioners to 8 within 5 years, which would require substantially more space. Buying premises sized for current operations creates future constraint; buying premises sized for projected operations creates current over-capacity. Hybrid approaches (owning a core building while leasing expansion space) sometimes work well for growth-stage practices.
Mature Multi-Partner Practice
Established multi-partner practices with stable operations are often well positioned for substantial ownership of premises. The practice has reached scale, the partner group is settled, and the long-term operations are predictable. These practices often buy premises that will house the practice for the foreseeable future, with the property becoming part of the partnership’s broader asset base.
Practice Sale or Succession Planning
Practitioners approaching practice sale or succession face specific considerations. Owning premises adds complexity to the practice sale (the property and practice may be sold separately or together), but also provides additional value to the eventual transaction. For practitioners planning succession within 3 to 5 years, the right premises strategy depends on the specific succession structure: family succession often supports continued ownership; an arm’s-length sale may favour structures that simplify the transaction.
Where Lender Specialisation Matters Most
Different lenders have different appetites for different professions. Routing the loan application to a lender with a strong appetite for the specific profession often produces materially better outcomes than approaching a generalist lender.
Healthcare-Specialist Lenders
Several lenders specifically focus on healthcare lending: medical practitioner finance, dental practice finance, allied health finance, day surgery, and specialist clinic finance. These lenders understand the profession’s economics, the specific premises requirements, and the typical practitioner profile. They often provide more flexible terms than generalist major banks for the same borrower and property: higher LVR ceilings, less conservative add-back policies, more accommodating loan structures, and better pricing.
Professional Services Focus
Some lenders specialise more broadly in professional services (legal, accounting, financial advisory, consulting). They understand the partnership and incorporation structures common in these professions, the typical fee-earning patterns, and the strong income profiles of established practitioners. Like healthcare specialists, professional services-focused lenders often outperform generalist lenders on similar deals.
Major Bank Treatment
Major banks generally lend to professional practitioners but apply their broader commercial lending policies. They may produce competitive outcomes for straightforward owner-occupier purchases by established practitioners, but often struggle with more complex situations (specialised property, multi-disciplinary practices, complex entity structures). Major banks are typically the right starting point, but not always the right ending point for professional practice lending.
Second-Tier and Specialist Banks
Second-tier banks (regional banks, specialist commercial banks) often have more flexible policies than major banks and can deliver strong outcomes for professional borrowers whose situations don’t fit cleanly within major banks’ policies. These lenders sometimes specialise by profession or by property type, providing a meaningful expertise advantage.
Non-Bank Commercial Lenders
Non-bank commercial lenders typically focus on specific niches: specialised property, complex borrower situations, and deals requiring more flexible terms. For professional practices that require approaches major and second-tier banks can’t provide, non-bank lenders offer valuable alternatives. Pricing is typically higher than that of mainstream banks, but the flexibility can be decisive in specific situations.
Broker Value for Professional Borrowers
Specialist commercial brokers who routinely work with professional borrowers have deep knowledge of which lenders best suit different profession-property-borrower combinations. The broker’s value is highest for complex situations: specialised properties, unusual practice structures, multiple-entity transactions, or borrowers with specific requirements. For straightforward situations, the broker’s value is real but less pronounced; for complex situations, the broker’s expertise can transform the outcome.
A Worked Example: Medical Practice Buying Standalone Clinic
To make the considerations concrete, consider an established general practice with two GP partners and two registered nurses, currently operating from leased premises with 5 years remaining. The practice has $1.1 million in annual revenue and $360,000 in combined EBITDA (after market-rate practitioner remuneration). The partners are considering purchasing a $2.0 million standalone clinic building suited to their operations.
The Initial Structure
Purchase price: $2.0 million. LVR: 70% (specialist medical premises lender). Loan: $1.4 million at 7.0% over 20 years P&I. Deposit and costs: $600,000 deposit + $110,000 stamp duty + $5,000 legal = $715,000. Each partner contributes $357,500 through their respective family trust. The property is owned 50/50 by the two family trusts, which lease the premises to the operating medical practice partnership at commercial rates.
The Cash Flow Position
Loan repayments: approximately $130,000 per year. Property outgoings (rates, insurance, body corporate, repairs, capital expenditure reserve): approximately $35,000 per year. Total annual property cost: $165,000. Practice’s current lease cost: $115,000 per year plus $20,000 outgoings = $135,000 per year. The practice pays $30,000 more per year for owned premises than current lease costs, but this excess is loan amortisation (building equity) rather than pure cost. The economic comparison favours ownership over the long term.
The Tax Position
The medical practice partnership pays $130,000 in annual rent to the property-owning trusts, which is fully deductible against practice income. The trusts receive $130,000 in rental income, against which they claim an interest deduction (approximately $97,000 in year 1), depreciation (approximately $30,000), and operating expenses (approximately $35,000). The trusts’ net taxable rental income is materially lower than the gross rent, providing tax-effective income distribution to family beneficiaries. Specific tax outcomes require accountant verification.
The Wealth Building Effect
After 10 years, assuming 3.5% annual property appreciation, the property would be worth approximately $2.82 million. The loan balance after 10 years of P&I would be approximately $920,000. Equity in the property: $1.9 million, of which each family trust holds $950,000 net of any other liabilities. This represents a substantial wealth accumulation outside the operating practice itself, providing retirement assets and succession flexibility.
Sensitivity to Partner Departure
If one partner departs the practice during the holding period, the structure handles it through pre-agreed mechanisms: the remaining partner can buy out the departing partner’s family trust interest, a new partner can buy in (replacing the departing partner’s family trust interest), or the departing partner’s family trust can retain its share and become a passive landlord while the practice continues. The specific arrangements should be set out in a written agreement at the outset; verbal understandings often fall short during actual transitions.
The Comparison to Pure Leasing
If the practice had continued leasing for the same 10 years, total rent would have been approximately $1.6 million (with annual escalations). Practice ownership would have built no property equity. The lease arrangement would have provided more flexibility for partner movements and practice changes, but produced no wealth-building outcome. The ownership path provides $1.9 million in equity in exchange for an ongoing commitment to the location and structure; the leasing path provides flexibility but no equity. The right choice depends on the partners’ commitment to the location and broader wealth strategies.
Practical Pointers for Professional Practitioners
Several practical habits support good outcomes for professional practitioners buying their own premises.
Engage Specialist Advisers Early
Specialist commercial brokers familiar with the profession, accountants familiar with professional practice structures, and solicitors experienced with both property and professional regulation provide combined expertise that the general adviser pool cannot match. Engaging these specialists early in the property search produces better outcomes than waiting until the property is selected to seek advice.
Match Premises to Long-Term Practice Vision
Premises decisions made for 3-year practice plans rarely suit the actual 15-year operation. Practitioners should think about their realistic long-term practice vision (size, services, partner structure) before committing to premises. Premises that suit the current operation but constrain growth, or premises that suit projected growth but burden current cash flow, both produce sub-optimal outcomes.
Confirm Profession-Specific Requirements
Different professions have different premises requirements (medical accessibility, allied health treatment spaces, dental fitouts, healthcare regulatory compliance). Verifying that the proposed premises meet all professional requirements before signing the contract is essential; surprises in this area can be very expensive to fix.
Plan the Entity Structure Before Settlement
Entity structure decisions made at or after settlement often create lasting complications. The right structure should be designed before contracts are signed, with appropriate documentation between the property-owning entity and the operating practice. Restructuring after settlement is possible but typically expensive and may have tax consequences.
Build Capital Expenditure Reserves
Professional practice premises typically require periodic capital expenditure: technology upgrades, fitout refreshes, and regulatory compliance updates. Building reserves for these costs from the start avoids needing to borrow additional funds when capital expenditure becomes necessary. Setting aside 1% to 2% of property value annually into capital expenditure reserves is a sensible discipline.
Document Partner Arrangements Comprehensively
Multi-partner premises ownership requires comprehensive documentation: who owns what, what happens if a partner exits, how decisions about the property are made, how rent reviews are conducted, and how capital expenditure is funded. Standard agreements typically don’t address all the specific scenarios that arise in professional practices. Custom documentation with appropriate legal review is essential.
Where to Read About Business Structures
The choice of business structure for the practice and for any property-owning entity has substantial implications for tax, asset protection, succession, and ongoing administration. While professional advice is essential for specific decisions, understanding the broader framework of available structures helps practitioners engage productively with their advisers.
The Australian Government’s Business.gov.au guide on the different business structures available to professional practices sets out the four main business structures (sole trader, company, partnership, trust) and the key factors that distinguish them. While the page focuses on operating business structures rather than property-owning entities specifically, the same structures are typically used for property-owning entities, and understanding the framework helps practitioners navigate conversations with their advisers about the right structure for their situation.
Frequently Asked Questions (FAQs)
1. Why do professional practices get favourable lending treatment?
Three main reasons. First, professional income is unusually stable compared to general business income, with established practitioners typically maintaining their income through economic cycles. Second, professional industries have substantial regulatory barriers to entry that protect against disruption. Third, professional borrowers typically have strong personal credit and demonstrated ability to meet commitments. The combined effect is favourable lender treatment: lighter income shading, more generous serviceability assessment, and access to specialist lenders with a strong appetite for the profession.
2. What LVR can I expect to achieve on my practice premises?
For standard owner-occupier purchases by established professional practitioners, an LVR of 65% to 70% is typical. Some specialist healthcare lenders extend to 75% or occasionally higher for very strong borrowers. Specialised property (day surgeries, dental practices with substantial fitouts) typically faces tighter LVR caps of 60% to 65%. SMSF-based purchases are typically capped at 70% maximum, often lower. The specific LVR available depends on the property, the borrower, the entity structure, and the lender.
3. Should I own my practice premises through my SMSF?
SMSF ownership of practice premises is one of the most common structures for established practitioners and offers genuine tax benefits, particularly in the pension phase. However, the structure has specific compliance requirements (the lease must be at commercial rates, the SMSF cannot lend to related parties, and the borrowing structure must comply with limited recourse borrowing arrangement rules), and the financing options are more limited (LVR is capped, and fewer lenders are willing to lend to SMSFs). The right structure depends on the practitioner’s overall balance, age, time horizon, and broader tax planning. Specialist SMSF advice is essential.
4. Can I buy my practice premises before my practice is established?
Possible but harder. Established practitioners with substantial trading history are the most attractive borrowers. New practitioners (newly qualified or recently established) typically need to demonstrate either a substantial personal financial position (deposits, savings, secure professional employment income), a substantial professional employment history before starting the practice, or both. Some lenders specialise in helping new practitioners purchase their first premises; the terms may be tighter than for established practitioners, but the lending is possible. A specialist commercial broker familiar with the profession can identify suitable lenders.
5. How does premises ownership interact with practice sale?
Premises ownership adds value but also complexity to the eventual sale of the practice. The practice and the premises can be sold together (combined value typically higher than the sum of the parts), or sold separately (practice to one buyer, premises to another, or retained as an investment). Each path has implications for tax, succession structure, and the new practitioner’s establishment. Planning the eventual exit at purchase (or at least scenario-planning it) helps practitioners design a structure that supports their preferred exit path. For practitioners approaching retirement, the premises often become a substantial retirement asset, either alongside or in place of practice goodwill.
6. What if my practice changes profession-specific requirements over time?
Professional practice requirements change over time: regulatory updates, technology changes, accessibility standards, and infection control protocols. Owned premises require the owner to fund compliance with new requirements; leased premises may or may not pass the cost to the tenant, depending on the lease terms. For owned premises, building capital expenditure reserves and proactively maintaining the building reduces the financial impact of regulatory changes. Major regulatory shifts can require substantial investment; practitioners should monitor profession-specific developments and plan accordingly.
7. Should partners in my practice all own equal shares of the premises?
Common but not always optimal. Some partnerships find equal ownership simplest; others use ownership shares that match practice ownership interests; still others use entirely separate property-owning structures with partners as the ultimate beneficial owners. The right approach depends on practice dynamics, expected partner movements, and individual partners’ broader financial positions. The arrangement should be documented comprehensively at the start, with clear provisions for partner exit, new partner entry, and rent setting between the property-owning entity and the practice. Standard partnership agreements typically don’t adequately address premises ownership.
The Bottom Line
Professional service practitioners (medical, legal, accounting, allied health) occupy a distinctive position in commercial property lending, typically receiving favourable treatment due to stable income, industry resilience, regulatory barriers, and strong borrower credentials. The right approach to buying practice premises depends on the specific profession, the practice structure, the property type, and the practitioner’s long-term plans. Entity structure decisions made at settlement have lasting implications for tax, asset protection, and succession; these decisions deserve careful thought with specialist professional advice.
For most established professional practitioners, the smartest approach is to engage a specialist commercial broker familiar with the profession, work with an accountant experienced in professional practice structures, plan the entity arrangements before contracts are signed, and match the premises decision to the realistic long-term practice vision rather than the current operation. Premises ownership often becomes the strongest single wealth-building lever for established practitioners, providing equity build over the practice’s life and retirement assets alongside practice goodwill. When done well, the property decision adds material value to the practice’s long-term economics; when done poorly, it unnecessarily constrains the practice. The diligence applied to the decision should match the long-term consequences.
