Leasehold
Last reviewed 13 June 2026 by Nick Lim, finance broker (FBAA).
Leasehold is the right to occupy and use a property for a fixed term under a lease, without owning the land or buildings. In a business sale a leasehold purchase means buying the business and taking over the lease, not the premises, unlike a freehold purchase. Because there is no real property to secure, lenders treat leasehold deals as higher risk and often fund them through a business loan or private lending rather than a commercial property loan.
Why Leasehold Matters
Leasehold changes the risk and the funding path because there is no property as security.
- Buyer owns the business and the lease, not the premises
- No real property security, so funding is harder and dearer
- Lease term and renewal options drive the deal's value
- Often funded by a business loan rather than property lending
- Lower entry cost than freehold but weaker long-term control
Common Features of Leasehold
- Fixed lease term with defined start and end
- Rent and outgoings payable to the landlord
- Make-good and assignment clauses affect transfer
- No land title in the operator's name
- Value tied to the strength and length of the lease
Official reference: moneysmart.gov.au
What is leasehold?
It is the right to use premises under a lease for a fixed term without owning them, unlike freehold.
Can you finance a leasehold business?
Yes, but usually through a business loan or private lending rather than a property loan, since there is no real security.
Why is leasehold riskier for lenders?
Because the value depends on a lease that can expire or be hard to assign, with no land as backstop.
Leasehold vs freehold, which is cheaper?
Leasehold has a lower entry price, but freehold gives stronger control and security.
What is a walk-in walk-out leasehold sale?
A walk-in walk-out sale transfers the leasehold business and its assets as a turnkey operation.