Finance question
Can I buy my business premises from my landlord?
Yes, if your landlord is willing to sell. The purchase is normally funded as a commercial property loan secured over the building, sized off the lender's valuation rather than the price you agree, and equity in your home or another property can cover the deposit. Many property-backed deals need no financials, subject to lender assessment.
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The short answer
Buying the building you trade from is a property loan, not a business loan
When a landlord decides to sell, the sitting tenant is a natural first buyer, and your lease may already give you an option to buy or a right of first refusal, so read it before anything else. Lenders treat the purchase as a commercial property loan secured over the building you will own, not as a loan to the business, which is why it can stand on the property even when your financials are thin. Property-backed facilities run to $5 million and beyond, and the deal rests on the equity rather than on trading history (property-backed business loans guide). The rent you pay today stops going to the landlord, though you take on the repairs, rates and insurance.
How much you put in depends on the building, and the range is wide. Two of our guides work freehold examples at 70% gearing: a $2 million freehold needs about $600,000 of equity plus costs (boarding kennel guide), and a $3 million freehold needs about $900,000 (caravan park guide). Specialised buildings sit lower. Banks treat service stations as specialised security at 50 to 60% of property value, with specialist lenders to around 70% (service station guide). The rule that catches tenants is that the loan is sized off the lender's valuation, not the price you agree, so every dollar above the valuation comes from you.
The deposit does not have to be cash. If you own a home or another property, a second mortgage structure can use that equity, because lenders look at the equity position and the property does not need to be paid off. Many property-backed deals need no financials, and an ATO debt is often workable. Ask for a pre-approval before you negotiate with the landlord, so a sale deadline does not set your terms. Ventas is a broker across 40+ lenders, not a single bank, and there is no upfront fee to you; the lender pays us on settlement.
Do you qualify?
What a lender looks at when a tenant buys the building.
A valuation of the building
The lender's valuer sets the loan size, not the price the landlord asks.
Deposit or equity
Savings, or equity in your home or another property, plus duty and costs.
Your trading record
How long you have operated from the site, and what the lease says about buying.
Type of building
Specialised buildings are valued more cautiously than ordinary shops, offices and warehouses.
Why tenants are well placed to buy
Rent becomes equity
Your occupancy cost goes toward a building you own, not one you rent.
Equity can be the deposit
A home or investment property can carry the gap.
You know the building
Years inside it means fewer surprises on repairs and running costs.
A worked example
A workshop owner is offered the building for $2 million and the lender's valuer agrees. At 70% gearing the lender advances $1.4 million, leaving $600,000 plus duty and costs. The owner raises the $600,000 against equity in their home and uses savings for the duty and costs, so the purchase settles without touching the business's working capital. Illustrative only.
Common questions
Frequently asked questions
Does my lease give me a right to buy the building?
Only if it says so. Some leases include an option to purchase or a right of first refusal when the landlord sells. Read the clause, or ask your solicitor, before you start negotiating, because it can set the price or the timing.
What if the landlord's price is higher than the valuation?
The loan is sized off the lender's valuation, not the contract price, so every dollar above the valuation comes from you on top of the deposit. A valuation before you commit tells you where you stand.
How much deposit do I need to buy my premises?
For a conventional building, plan on roughly 30% of the lender's valuation plus duty and costs, and more for specialised property. In our guides a $2 million freehold at 70% gearing needs about $600,000 of equity plus costs, and equity in your home can count toward it.
Can I buy the building through my SMSF instead?
Some owners do. A self-managed super fund can buy business premises and lease them to the member's business at market rent, but the rules are strict and the lending is specialised. Speak to your accountant or SMSF adviser first.
Is GST charged when I buy commercial premises?
A commercial property sale can carry GST unless an exemption applies, such as a sale of a going concern or a margin scheme sale. It changes how much cash you need at settlement, so confirm it with your accountant before you sign.