There are a lot of misconceptions out there about the council zoning required for a dental practice. Can you put a dental chair in a retail shop and start practicing? Can a dental practice operate in an area that is zoned “commercial”, or does it need special purpose zoning? If a practice has been in the area for a long time…is council approval assumed? Are all approvals for dental practice use the same?  What happens if your practice is operating under the wrong permit?

To provide some clarity in this regard, we thought we would answer some dental practice zoning FAQs.

Q1. What is council zoning?

A1. Councils divide land into different areas, or "zones." The zoning of a piece of land determines how you can use it. An area zoned "residential" might only allow houses to be built on the land, while an area zoned "commercial" might allow retail stores and other businesses to be built there. 

Permitted uses for these zones can be found online, in each council’s planning scheme. Dental Practices will usually fall under a medical centre or health consulting room definition within the local council planning schemes.

Q2. Can a dental practice operate in any area that is zoned “commercial”?

A2. Generally speaking, the answer is “No”; a dental practice usually requires special purpose zoning. To operate a dental practice, you need two approvals - the first being a permitted use approval, and the second being an approval for the build. 

If the premises is located in a retail or office building, you may also need the permission of the body corporate. There are many buildings that do not allow dental or medical services to operate within the building, even though the zoning may permit it.

Q3. How can I work out what zoning/usage approvals have been granted on my premises?

A3. You can:

• Call your local council and ask if there are any approvals on record for the establishment of the practice
• Ask the landlord/property or business vendor for copies of the approvals
• Explore the DA Search component of your local government website

Q4. What are existing use rights?

A4. Sometimes, a dental practice will predate the zoning ordinances of the council. When this happens, the practice will usually have an exemption from any newer zoning restrictions or compliance requirements.

Q5. If the zoning allows for a dental practice, can I operate the dental practice however I want?

A5. A Council zoning approval doesn’t just dictate the type of business that can be established on the site. It can also dictate:

• The hours of operation (it can say no trading in late evenings or weekends, for example)
• The number of concurrent clinicians allowed to be working there at one time
• There are some zoning permits that dictate that a % of the premises has to be used for residential purposes.

Q5. How can the incorrect council zoning usage influence my practice sale?

A5. A large part of a practice’s goodwill is often tied to its ability to trade in its current location into the future.

A buyer’s lawyer is there to mitigate the buyer’s risk. As part of this risk mitigation, a buyer’s lawyer should check the council zoning to ensure that the practice can continue to trade as it has into the future. If it is discovered that the practice is operating in a way that is in contravention to the zoning permit, the lawyer will often advise their client to either adjust the terms (reduce the price) of the deal, or not to proceed with the purchase until the zoning is fixed.

Examples of sales where we have seen this happen include:

• A practice operating in a residential conversion building that has approval for commercial use, but not medical/dental.
• A practice for sale on premises that has zoning approval for medical/dental, however, it also forbids Saturday trading…and 20% of the practice’s billings were being done on a Saturday.
• A practice for sale on premises that has zoning approval for medical/dental, however, it is an old approval that only allows for 1 clinician to be operating at a time…and the practice regularly has 3 dentists working at the same time.

Q6. What happens if my practice is operating in a way that isn’t allowed for within the original approval? (i.e., the zoning permit only allows for 1 clinician at a time, and we have several, or the zoning permit doesn’t allow Saturday trading and we offer Saturday appointments)

A6. Often, this can occur innocently enough, simply by the organic growth of a practice over time. In our experience, this can often be fixed in a few months by an application to the council. You may need advice from a town planner.

This is another reason why you may want to exit plan well in advance of when you wish to sell your practice.