Can You Get a Commercial Property Loan With No Tenant in Australia?
Property Lending Hub
No tenant, no rent · What the loan is struck against · Australian commercial property
An empty commercial building can still be financed, but the lender cannot rely on a lease to support either the value or the repayments. This guide follows the whole customer journey: before you offer, through valuation and settlement, while the building is empty, when a tenant signs, and when the loan can be reviewed or refinanced.
Quick Answer
Yes, you can finance a commercial property with no tenant, but the loan has to work without rental income: the lender generally values the building as empty and looks to the occupying business, other documented income or a credible short-term exit to carry the repayments. Before you sign, work out three things: the value the lender is likely to use, the income that carries the repayments while the building is empty, and what happens if the valuation or the first lease arrives later than planned. The agent agreement, listing and leasing correspondence that protect your tax position are the same pack a credit team wants before it will write a commercial property loan against a building with no income, so assemble it once.
Also called: vacant commercial property finance, untenanted commercial property finance, commercial property loan with no tenant, empty commercial building loan.
| Where you are | What matters most right now | Read first |
|---|---|---|
| Looking at a listing for an empty building | The lender will not treat the asking price as the lending value. Start by understanding the empty-building valuation basis and what income will service the loan. | What an untenanted building is worth to a lender |
| Still deciding whether you will occupy it or lease it to someone else | An owner-occupier can present trading cash flow. An investor buying it empty has to fund the vacancy and prove how the property reaches a tenant or another exit. | How servicing works with no rent |
| Offer accepted and the contract has a finance date | The lender's valuation, servicing assessment and any tax or legal questions need to run in parallel. The finance condition should cover the amount and terms you actually need. | The steps from offer to first lease |
| The finance date is close and approval or valuation is not finished | Do not assume the contract extends itself. Find out exactly what is still outstanding, and have your solicitor deal with the contract deadline before it passes. | If finance is not ready by the finance date |
| The valuation came back below the price | The loan is usually sized from the lower lender-supported value, so the shortfall becomes extra cash unless the price, lender or structure changes. | If the valuation is below the price |
| The building needs work before a tenant can move in | Separate the as-is value, the works budget and the future leased position. A future tenant does not fund today's purchase unless there is evidence the lender will accept. | If the building needs work before it can be let |
| A prospective tenant appears before settlement | A signed heads of agreement, agreement to lease or lease can move the file from forecast toward evidence, but the lender decides what it will rely on and whether the valuation basis changes. | If a tenant appears before settlement |
| Buying through your SMSF | The business real property test can be a gating issue before the loan question. An empty property needs specialist SMSF and tax advice before the contract is exchanged. | If your SMSF is buying it |
| The building is going to auction | You may have no finance condition to fall back on, so the valuation basis, borrowing amount and cash gap need to be known before you bid. | If it is sold at auction |
| You rent the building now and your landlord is selling | You are the occupier, so this is an owner-occupier purchase with its own lease, GST and buying-entity questions. | Buying your premises from your landlord |
| You already own it and the tenant has left | The loan may have been written on income the building no longer earns. That is a review and covenant question, not the same problem as buying empty. | Covenant breach or interest-only expiry |
| A bank has already said no | The next route depends on why the file failed: servicing, valuation, security type, timing or the absence of a lease. Do not solve the wrong problem with a more expensive loan. | After a bank declines a commercial property loan |
Can you get a loan on a commercial property with no tenant?
Yes, you can get a loan on a commercial property with no tenant, but the lender assesses it on a different basis: the loan is struck against the building's value with no lease in place, and the repayments have to be serviced from income other than rent. A tenanted commercial building is assessed largely through its lease: the rent is the income, the tenant is the risk, and the loan is sized against a value derived from that rent. Take the tenant away and all three inputs disappear at once. The lender does not simply discount the file, it reassesses it on a different footing, which is why an empty building can be perfectly fundable and still produce a very different number from the one the sale price suggested. If you are ready to act rather than research, the mechanics of the facility itself sit on the commercial property loans page, and a broker can tell you which basis your particular building falls under before you sign.
Before any of the mechanics, it is worth separating three different things that all get called vacant, because conflating them is where real money gets lost. In finance the word means a building with no tenant. In conveyancing it means a settlement condition. In tax vocabulary it means land with no substantial and permanent structure, close to the opposite of an empty building, and the deduction rules that attach to it do not apply to a building at all. Your solicitor, your accountant and your lender are each using the word to mean something different, and only one of the three is what this guide is about. If you want a definition to anchor the finance sense, the commercial property loan entry sets it out.
| Which vacant | What it actually means | Whose question it is |
|---|---|---|
| Empty building with no tenant | A completed commercial building with no lease in place and no rent coming in, so there is no rental income for a lender to assess. This is the meaning this guide covers. | Your lender and your broker |
| Vacant possession as a settlement condition | A contract term about the state the property must be handed over in at settlement, free of occupants and their goods. It says nothing about whether the building can be let or funded. | Your solicitor or conveyancer |
| Vacant land with no substantial structure | Land carrying no substantial and permanent structure, which is the opposite of an empty building. A separate set of holding-cost rules attaches to it and they are a contrast case here, never the answer. | Your accountant or registered tax agent |
One more thing to route before the mechanics. If your tenant has already gone and the loan is already in place, that is a different problem with a different clock, because you are dealing with a facility that was written on income the building no longer produces. The mid-loan case is covered where the owner occupied and investment classifications are set out, and the review, revaluation and covenant path is covered in the guide to a covenant breach or interest-only expiry. If instead you are weighing up whether to buy with the tenant in place at all, that comparison belongs with buying a commercial property with an existing tenant. This guide covers funding the empty one.
What is an untenanted commercial property worth to a lender?
To a lender, an untenanted commercial property is usually worth its market value as it stands, with no tenant and no lease, and the loan is struck against that figure rather than against what the building would be worth with a lease in place. This is the single most useful thing to understand before you negotiate, because it is not a haircut applied to an agreed price. It is a different question being asked of the same building: not what would an investor pay for this income stream, but what would this building fetch if it were sold empty. Those two questions can return numbers that are close together or a long way apart, and on a building with no lease the second question is the one the valuation answers.
Three approaches do the work in practice. Direct comparison, weighing recent sales of similar empty buildings, is the primary method on an untenanted asset because there is no income to work from. Income capitalisation can still be run, but on an estimated market rent rather than an actual one, and discounted to account for the time and the incentives it would take to get a tenant in. Cost or summation sits behind both as a cross-check, and it does more work on specialised industrial and warehouse buildings where comparable sales are thin. The valuation entry covers the general mechanics, and there is a fuller treatment of what a commercial valuation actually tests and of how a lender reads specialised security where the building is purpose-built.
The valuation profession's own guidance for mortgage and loan security work sets out when a property is valued on an empty-building basis, and it names two situations. It says owner-occupied property "should be valued on a vacant possession basis (unless otherwise instructed)", and it says lenders "may ask for a vacant possession value where a property is subject to a lease with an imminent expiry" and the two values are likely to differ significantly. Australian Property Institute, ANZVGP 112, Guidance Paper, Valuations for Mortgage and Loan Security Purposes, s 5.3, effective 1 January 2025. Professional guidance to valuer members, not a lender rule and not a statement about what any borrower can access. Panel instructions vary by lender.
Both named situations are about a building that is occupied or let: an owner running a business from it, or a tenant whose lease is about to end. A building that is already empty at the date of valuation needs neither, because its market value as it stands already reflects that there is no tenant. The guidance treats the opposite move as the special case: where a lender asks for a value on an alternative basis, and it gives subject to a proposed lease as one example, the report should show the market value as is alongside the value on that assumption. Australian Property Institute, ANZVGP 112, s 5.4, Value Subject to a Special Assumption, read at source 10 September 2026. Professional guidance to valuer members, not a lender rule. Whether a lender will rely on any value beyond the as-is figure is a matter for its own credit policy.
The practical consequence for you is that on an empty building the as-is figure is the one the loan is usually struck against, so the question to ask your broker early is whether this lender will look at anything beyond it, such as an agreement to lease already signed, not what percentage it will lend.
| What is being compared | Value assuming the building is empty | Value subject to an existing lease |
|---|---|---|
| What it assumes | The building is sold with no tenant and no lease attached, so a buyer takes on the letting risk. | The building is sold with the lease, the rent and the tenant's covenant attached, and a buyer inherits the income. |
| Primary method | Direct comparison against sales of similar untenanted buildings. | Income capitalisation of the actual contracted rent. |
| Where estimated rent comes in | As a notional market rent, discounted for the time and incentives needed to let the space. | Only at review or expiry, as a test of whether the passing rent is sustainable. |
| Cross-check used | Cost or summation, which carries more weight on specialised industrial and warehouse buildings. | Direct comparison against sales of similar leased investments. |
| When it applies | Named in the profession's guidance for owner-occupied property and where a lease has an imminent expiry. Where the building is already empty, its market value as it stands already reflects no tenant. | The default where a lease is in place and is expected to run. |
| What the loan is struck against | The empty-building figure, whatever the contract price says, which is what sets the cash you have to find. | The investment figure, with the tenant's strength feeding the maximum advance. |
What if you will lease it to your own business?
Buying through a family trust or a property company and leasing the building to your own trading business does not turn it into a tenanted investment in the lender's eyes. The same guidance that sets the empty-building basis for owner-occupied property says owner-occupied property "includes related entity occupied property", so a lease to your own company is usually valued as though the building were empty. Australian Property Institute, ANZVGP 112, Guidance Paper, Valuations for Mortgage and Loan Security Purposes, s 5.3, effective 1 January 2025. Professional guidance to valuer members, not a lender rule.
The rent your company pays also tends not to count as independent rental income. Lenders generally look through a related-party lease to the trading business that pays it, which is why the owner-occupier and alternative documentation routes in the next section are the ones that fit this structure. Which entity buys, the lease terms and the GST position are questions for your solicitor and registered tax agent before the contract names a buyer, and the guide to buying your premises from your landlord works through the related-entity structure in detail.
What if the valuation comes in below the price?
If the valuation comes in below the price, the loan is usually sized on the lower figure, so the difference becomes cash you have to find. On an empty building that gap is often built in rather than a valuer's mistake: a price paid by an owner-occupier who needs that particular building, or by an investor pricing in a lease that does not exist yet, can sit above what the building fetches as it stands.
Two things are worth knowing before you react. The valuation the lender relies on is one the lender instructs: the guidance says instructions are ideally received from the lender, and a report a borrower commissions has to be confirmed with the lender and re-issued to it before the lender can rely on it. Australian Property Institute, ANZVGP 112, s 4.1 Instructions from Lender and s 4.2 Other Instructions, read at source 10 September 2026.
And your options are widest while the contract is still conditional: add cash, renegotiate with the valuation as evidence, or have a broker approach a lender that will instruct its own valuation. The levers are set out in full in what happens when a commercial valuation comes in under the contract price.
What if the building needs work before it can be let?
If the building needs work before a tenant will take it, the lender can look at two values: the building as it stands, and the building as it will be once the work is done. The valuation guidance says that where a value depends on something physical or legal still happening, it is assessed on an "as if complete" basis, and that the existing "as is" market value should be provided alongside it. Australian Property Institute, ANZVGP 112, s 6.1 Market Value "As If Complete", effective 1 January 2025. Professional guidance to valuer members, not a lender rule.
In practice the purchase is usually struck against the as-is figure and the works are funded separately, which is why a builder's quote and a scope of works belong in the pack from the first conversation. The incentives an agent says it will take to land a tenant, a rent-free period or a contribution to the tenant's fit-out, are a cost you fund as well: they reduce what the first lease is worth, and a valuer capitalising an estimated rent allows for them. Where the works and the incentive both have to be paid for before any rent arrives, the short-term route through private lending is the one priced for that window, with a signed lease as the exit.
If your building is currently let and you are working out how much of your borrowing power the tenant is actually providing, that is set out in the guide to how your tenant sets your loan to value ratio. It is the mirror image of this section, and reading both together is the fastest way to see how much of a commercial loan is really a lease in disguise.
How does a lender assess servicing when there is no rent?
When a commercial property has no rent, the lender assesses servicing on income from somewhere other than the building: the trading cash flow of a business that will occupy it, other documented income, rent from properties you already own, or a defined exit on a short-term facility. A commercial credit team is not looking for a reason to say no to an empty building, it is looking for a repayment source it can evidence, and when the building is not providing one it looks past the building. Where that leaves you depends entirely on what else you have, which is why two buyers can present the same empty warehouse and get completely different answers.
You will often read that most lenders will not lend on vacant commercial premises because there is no income to service the loan. That is true of a lease-driven assessment and false as a universal rule. Empty buildings can still be funded where the lender can evidence another repayment source, which is why the first split is owner-occupier, alternative documentation or a short-term facility with a defined exit.
Will a lender use market rent if the property is vacant?
A valuer can use an estimated market rent when a commercial property is vacant, but estimated rent is not the same thing as contracted rent. It is a valuation input that can be adjusted for the time and incentives needed to secure a tenant. A lender may use that analysis as support, but the loan still needs a repayment source it can evidence while no tenant is paying rent. There is a fuller treatment of how rental income shading works where rent does exist; the key distinction here is simpler: a forecast rent helps explain value, while a signed lease creates income evidence.
Can you use a lease doc loan with no tenant?
A pure lease doc commercial property loan generally does not fit a property with no active tenant because the product is designed to assess the lease and the contracted rent. With no lease, there is no lease income for that pathway to read. If a tenant signs an arm's-length agreement before or after settlement, the position can change, which is why the leasing plan and the finance plan should be run together rather than one after the other.
What remains open is three routes, described by class rather than by lender. The owner-occupier route assesses the trading cash flow of the business that will move in, which turns the building into premises rather than an investment. The alternative documentation route evidences income from business activity statements, accountant declarations or bank statements where full financials are not available, and the low doc entry sets out what that means in practice. The short-term route, through private lending or a caveat facility, is priced for a defined exit rather than for a long hold, and a credit team will want to see what the exit actually is before it will look at it at all.
| Finance route | What the lender relies on | Tenant requirement, fit and failure point |
|---|---|---|
| Full-doc commercial | Documented business cash flow, other verified income or a combination the lender accepts. | An active tenant is not inherently required if the borrower can service the debt without this property's rent. Best fit where current financials show durable income; it stops working when the income or security does not clear the lender's assessment. |
| Low-doc or alternative documentation | Business income verified through alternative evidence such as business activity statements, bank statements or an accountant declaration where the lender accepts them. | A tenant is not necessarily required. This route changes how income is evidenced, not whether servicing has to be demonstrated; it does not turn unsupported future rent into income. |
| Lease-doc | The contracted rent under an acceptable lease. | A pure lease-doc assessment requires lease evidence; published Australian lender criteria can require an active arm's-length tenant. With no active lease and no contracted rent, this pathway generally does not fit. |
| Short-term or private | A credible defined exit, supported by the security and whatever interim repayment or interest arrangement the lender requires. | No tenant is required as a universal rule, although a proposed lease can form part of the exit. It is useful where timing or documentation makes long-term debt unsuitable, and it fails when the exit is only an assumption or the holding period is not funded. |
Published lender product criteria were checked on 10 September 2026 to confirm the distinction in the lease-doc row: a lease-based product assesses the rent under an active arm's-length lease, while alternative documentation products verify business income through accountant declarations, business activity statements and bank statements. Product criteria only, not a statement that any lender will approve a particular property or borrower.
Equity in your home or another property you own can close the deposit or cover a valuation gap as additional security, but it does not replace the missing rent: the servicing test still has to be met from income. It also ties the properties together, so both are exposed if the loan goes wrong, which is worth weighing before your home goes into a commercial deal.
| Evidence | What it shows a credit team | Which route it supports |
|---|---|---|
| Trading financials of the occupying business | That the repayments are covered by an operating business, not by a hoped-for tenant. | Owner-occupier |
| Business activity statements and accountant declarations | Income and turnover where full financials are not available or not yet lodged. | Alternative documentation |
| Rent from other properties you already own | Contracted income from elsewhere in the portfolio that can absorb this building's outgoings. | Owner-occupier or alternative documentation |
| Agent agreement, listing and leasing correspondence | That the premises are genuinely on the market, which is what makes an estimated market rent worth anything to an assessor. | All three |
| A signed heads of agreement or agreement to lease | A named prospective tenant on stated terms, which moves the file from forecast towards evidence. | All three, and it can reopen the leased basis |
| A documented exit, such as a sale, a refinance or a lease already agreed | How the facility ends, which is the whole question on a short-term or private facility. | Short-term or private |
| Cash reserves set aside for outgoings and repayments | That the holding period is funded rather than assumed, which is the concern an empty building raises first. | All three |
What if your SMSF is buying it?
If your SMSF is borrowing to buy an empty commercial building, check the timing test before you sign, because the building has to qualify at the moment the borrowing starts. From 10 August 2026 a limited recourse borrowing arrangement can only be used to acquire real property that is business real property, and the tax office says the property "must be business real property at the time the LRBA is entered into". Contracts exchanged before 10 August 2026 are unaffected. Australian Taxation Office, Changes to LRBAs for property from 10 August, last updated 29 July 2026, and Changes to limited recourse borrowing arrangements, both read 10 September 2026. Not superannuation or tax advice.
Business real property turns on use: the tax office's ruling says the property must be "used wholly and exclusively in" one or more businesses, which need not be the fund's own. Australian Taxation Office, SMSFR 2009/1, the business use test, read 10 September 2026.
A building that is empty on the day the borrowing starts is the case the change guidance does not spell out, and specialist SMSF commentary has noted that the tax office's guidance does not explicitly address whether a vacant business property qualifies. So the plan described above, buying in the fund and having your own company move in after settlement, needs a licensed SMSF adviser and a registered tax agent to confirm the position on your facts before the contract is exchanged, not after. If the fund does not borrow, the timing test does not arise in the same way.
From our broking, indicative
What actually decides these files is rarely the building. It is whether there is a repayment source that survives the building staying empty for longer than anyone plans for, and whether the borrower has already thought about that in writing.
- What a credit team looks at first, when there is no rent, is not the property at all. It is the strength and the durability of the other income, because that is the only thing standing between the file and a vacancy of unknown length.
- Other income matters more on an empty building than on any other commercial file we place. On a leased asset the tenant can carry a thin borrower. Here there is nothing to carry anyone.
- What gets these deals declined is almost never the valuation coming back on the empty-building basis, which everyone expects. It is an unfunded holding period: no reserve named, no outgoings budgeted, and no answer to what happens if the space is still empty well past the optimistic case.
- The reframe worth knowing: the requirement to keep agent agreements, listings and correspondence in order to protect your tax position is published and well covered. What is rarely spelled out is that a credit team reads exactly those same documents, and reads them as evidence of whether a letting assumption is real. Assemble the pack once and it does two jobs.
Indicative and qualitative only, drawn from deals we have placed and current as at the review date shown on this page. Deliberately carries no figures, because every loan to value, shading and pricing band circulating publicly on this question traces to lender or broker marketing rather than to published credit policy, an industry body or a regulator. Not a quote, not an offer, and not a statement about approval likelihood. Actual terms depend on lender policy and your circumstances at the time of application. Not financial advice.
Will a lender give you time to find a tenant?
There is no standard Australian commercial-loan grace period for finding a tenant published by a regulator, industry body or lender in the sources reviewed for this guide. A lender can still impose a deal-specific condition about leasing, reserves or the exit, but that is a term of that facility and needs to be read in writing. The separate time measure that is clearly documented sits in the valuation, not in the loan.
The resolution is that the time question lives in the valuation. Where a valuer capitalises an estimated rent on an empty building, the figure is discounted for the time and incentives it would take to let the space, and the valuation profession's own guidance for mortgage and loan security work adds a second time measure: "An estimated marketing period should be provided." Australian Property Institute, ANZVGP 112, Guidance Paper, Valuations for Mortgage and Loan Security Purposes, s 5.3, effective 1 January 2025. A statement in the valuation report about how long the property would take to market on the valuer's assumptions. Not a lender's commitment, not a grace period, and not a term of any loan.
So the concept exists, it is Australian, and it is documented. It is a professional opinion recorded in a report you may never see, not a period the lender has agreed to carry you through. No Australian lender, industry body or regulator source was found offering a formal leasing-up period as a feature of a commercial facility.
You may hear that some lenders will approve a loan on condition that a tenant signs within a set number of months. Some broker pages describe that arrangement, but it is not published as a standard term in any lender, industry body or regulator source we read, so treat it as a lender-by-lender condition: get the deadline, the evidence the lender will accept and the consequence of missing it in writing before you rely on it. The more common ways a lender handles the months before a lease are interest-only repayments and, on some short-term facilities, interest that is added to the loan rather than paid monthly. Neither removes the need for a funded reserve, because both still have to be repaid from somewhere if the building stays empty.
What the estimated marketing period is
- A valuer's opinion, recorded in the valuation report
- An assumption about how long the property would take to market
- Australian, documented, and named in the profession's own guidance
- Read alongside the letting-up allowance where an estimated rent is capitalised
- Useful context for how a lender reads the letting risk
What it is not
- A grace period on your repayments
- A term of the loan, or anything the lender has committed to
- A promise that the building will let inside it
- Something you can hold a lender to if the space stays empty
- The same thing as the American leasing-up finance concept
Three pieces of vocabulary are worth defining once and then routing away, because they turn up in Australian search results while describing something else. Leasing-up financing and construction-to-permanent lending are American structures. Debt service coverage ratio is the American framing of a test Australian commercial credit runs as interest cover. That last one is not a matter of taste, and there is a regulator on the record about the general pattern: the prudential regulator's letter to authorised deposit-taking institutions on commercial property lending observes that "Debt yield (net operating income to total debt) is used by some overseas banks as a key underwriting measure, but it is not commonly used within the Australian market." When an Australian page tells you an overseas measure is standard practice here, that is the sort of source worth checking it against. Australian Prudential Regulation Authority, Letter to ADIs: Commercial property lending, 7 March 2017, status Current, verified 10 September 2026. Prudential guidance to authorised deposit-taking institutions about their own underwriting. Not binding on non-bank or private lenders, and not a statement about any borrower's file.
The same letter names the concern that sits closest to an empty building, which is the sizing test itself: "A key concern is where ADIs have not adjusted the minimum Interest Cover Ratio (ICR), used for debt sizing investment loans, as interest rates have declined." In the same passage the regulator said it did not, at that time, intend to prescribe an approach to setting minimum interest cover ratios. No figure attaches to that in this guide, deliberately, because the letter does not publish one and the bands in circulation elsewhere come from marketing. What it tells you is where the pressure sits: interest cover is the test, it is a test about income, and an empty building brings none. Same source and same qualifier. The letter states no ratio, and none is given here.
The loan to value ratio entry covers the security-side test, and the general mechanics of how commercial property loans work cover how the two tests interact on a normal file. Where a file does not clear the servicing test at all, the routes that stay open are set out under what happens after a bank declines a commercial property loan.
What does an empty commercial building cost to hold?
Holding an empty commercial building still costs land tax, council and water rates and insurance, because none of them depends on having a tenant, and with no lease in place there is no tenant contribution to offset them. In Victoria a newer commercial and industrial property tax can apply as well. This is the part buyers most often model badly, because the instinct is that an empty building is a cheap building. In holding-cost terms the opposite is closer to the truth, because the recoveries a lease would have provided are not there.
Start with what the state revenue offices say in their own words. In Queensland, "Land tax is an annual state tax that applies to freehold land, whether vacant or built on (residential, commercial & investment properties) and occupied or not." Queensland Revenue Office, Land tax, read at source 10 September 2026. Queensland only. Thresholds and rates differ by state and territory; confirm with the relevant revenue office.
In New South Wales the point is put even more bluntly: "It does not matter if you earn income from your land or not." Revenue NSW also lists commercial properties, including factories, shops and warehouses, among the land liable for land tax. Revenue NSW, What is land tax?, page last updated 4 June 2026, read at source 10 September 2026. New South Wales only. Read in context at source; the sentence concerns whether land tax applies, not how it is calculated.
Both are saying the same thing in different words, and it is the thing that matters here: liability follows the land and the ownership, not the income.
Two territories are exceptions, and a national answer has to name both. In the Australian Capital Territory, "Land tax does not apply to commercial properties." Commercial property there still pays general rates. Australian Capital Territory, ACT Revenue Office, About land tax, read at source 10 September 2026.
The Northern Territory does not impose land tax at all. So it is not true that land tax applies to commercial property everywhere in Australia. Commonwealth Grants Commission, Commission's Assessment Methodology, Land tax, 2025 Methodology Review, read at source 10 September 2026.
Then there is a layer that is easy to miss. Victoria has introduced a commercial and industrial property tax, and it is the clearest example of a holding cost that does not care whether your building is earning. It is an annual tax on the land value of commercial and industrial property in Victoria, applying after a ten-year transition period that begins with a relevant entry transaction on or after 1 July 2024. It generally applies at a flat rate of one per cent of the property's site or unimproved value each year, provided the property continues to have a qualifying use. Common qualifying uses include retail premises, offices, warehouses, factories, and vacant commercial or industrial land. It is separate from land tax: during the transition land tax may still apply, and once the transition is complete the owner may be liable for both. Note what that does to an empty building: qualifying use is about what the property is, not about whether anyone is in it. State Revenue Office Victoria, Understanding commercial and industrial property tax, page last updated 24 August 2026, read at source 10 September 2026. Victoria only. Liability turns on land value and qualifying use, not on whether the property is tenanted or producing income. Other states and territories have their own regimes; confirm with the relevant revenue office.
You may also see headlines announcing a new tax on vacant commercial properties in Australia. At the review date these describe a proposal, not an enacted charge. There is no general commercial vacancy tax in Australia, and the residential vacancy charges that do exist in some jurisdictions do not reach commercial, retail or industrial buildings left empty. Any percentage attached to those headlines is a proposed figure and should not be used in a holding-cost model. What does exist is the Victorian charge above, which is a different thing entirely and turns on use rather than on vacancy.
Does commercial property insurance change when the building is vacant?
Yes. Vacancy changes the risk profile of a commercial building, so the insurance position should be checked before settlement rather than assumed from the cover that applied while it was occupied. QBE's Australian commercial-property risk guidance says unoccupied buildings face increased property-damage and liability risk and specifically points to security, maintenance and regular inspection as controls. The exact notification requirement, vacancy period, exclusions and conditions are policy-specific, so ask the insurer or insurance broker to confirm in writing that the building will be covered in its actual unoccupied state and what you have to do to keep that cover in force. If the loan offer requires evidence of insurance, make sure the policy and certificate of currency match the property and the lender's condition before settlement. QBE Australia, Understanding commercial property risk, 11 November 2024, read 10 September 2026. QBE states that unoccupied buildings are at greater risk and should be secured, maintained and regularly inspected. Policy terms vary; this is not insurance advice.
Council and water rates continue in the ordinary way and, with no tenant, there is no lease under which any part of them is recovered. Finally, deductibility: whether you can keep claiming holding costs while the building sits empty turns largely on whether the premises are genuinely held to produce income, which in practice means genuinely being marketed for lease. The same marketing record also bears on the going concern question in the next section, because it helps show whether a leasing enterprise is still being carried on. Both are questions for your registered tax agent on your facts. If you want the definitional anchor, the going concern entry sets it out, and the comparison against a building bought with income in place is in the guide to buying a commercial property with an existing tenant.
| Holding cost | What decides it | Does an empty building change it? |
|---|---|---|
| Land tax | Land value and ownership, assessed annually by the state or territory revenue office. Queensland applies it to freehold land "whether vacant or built on ... and occupied or not"; New South Wales states "It does not matter if you earn income from your land or not." | No. Liability follows the land, not the income. Two exceptions: in the Australian Capital Territory land tax does not apply to commercial properties, and the Northern Territory does not impose land tax at all. |
| Council and water rates | The local authority, on its own valuation and rating basis. | Not the charge itself, but with no lease in place there is no tenant contribution or recovery, so you carry the whole amount. |
| Insurance while unoccupied | Your insurer's terms for unoccupied commercial premises, which commonly attach conditions about inspections, security and the length of the vacancy. | Yes. Cover for an empty building is usually written differently, so confirm the position with your insurer before settlement. |
| Victoria's commercial and industrial property tax | Site or unimproved land value and qualifying use, generally at a flat one per cent a year after a ten-year transition beginning with an entry transaction on or after 1 July 2024. Separate from land tax, and both may apply once the transition is complete. | No. It turns on qualifying use, not on tenancy or income, and vacant commercial or industrial land is itself a qualifying use. Victoria only. |
| Deductibility of holding costs | Whether the premises are genuinely held for the purpose of producing income, which in practice turns on whether they are actively being marketed for lease. | Potentially yes. The same marketing record also bears on the going concern question at settlement. A question for your registered tax agent on your facts. |
What happens with going concern and GST when the building is empty?
An empty commercial building can still qualify as a GST-free going concern if the vendor is continuing an existing leasing enterprise through a temporary vacancy. If the property has never been leased and there is no leasing enterprise to supply, selling the building by itself is generally not a going concern. The tax office states the starting point plainly: "The sale of a property by itself isn't regarded as a going concern." The same page says a fully tenanted building sold with all its leases, agreements and covenants can qualify, and so can a partially tenanted building where the vacant part is actively marketed for lease or undergoing repairs or refurbishment. Its detailed ruling then makes the vacancy distinction explicit: a building that has previously been leased can remain part of a leasing enterprise while a new tenant is actively sought, whereas a building that has never previously been leased does not start a leasing enterprise merely because it is being marketed. Australian Taxation Office, Selling a going concern, page's own last updated date 15 December 2022, and GSTR 2002/5, paragraphs 149 to 156, read 10 September 2026. Not tax advice; refer to a registered tax agent.
That distinction is the one a buyer needs before settlement. "Empty today" is not enough information. Ask whether the vendor previously operated a leasing enterprise, whether the property is genuinely being marketed or refurbished as part of that enterprise, what agreements or leases will transfer, and whether the vendor will carry the enterprise on until completion. The contract wording cannot manufacture an enterprise that does not exist.
Does it matter whether the building was ever leased?
Yes. Whether the vendor has previously operated a leasing enterprise is one of the first facts to establish. GSTR 2002/5 says that a property which has previously been leased can remain part of a leasing enterprise during temporary vacancy while a new tenant is actively sought. It also says that where a building has not previously been leased, merely marketing it for lease does not mean a leasing enterprise is already operating. Australian Taxation Office, GSTR 2002/5, paragraphs 149 to 156, read 10 September 2026. Not tax advice; refer to a registered tax agent.
The ruling even gives the useful edge case: a commercial building can have no tenants at the sale date and still be part of an operating leasing enterprise where the owner is actively marketing some floors and refurbishing others as part of the leasing activity. So the practical question is not simply "is the building empty?" It is "what enterprise is the vendor actually carrying on at settlement, and what is being supplied to you?"
That turns the evidence question round. Ask the vendor for the same pack this guide asks you to keep: the agent agreement, the listing history, and the enquiries and offers since the tenant left, because that is what shows a leasing enterprise was still running on the day of sale. Whether it is enough on your facts is a question for a registered tax agent, not something the contract can decide by using the right words.
Where the concession is not available, three consequences land together. The first is cash: goods and services tax applies to the price and the buyer funds it on the day, on top of the deposit and the costs already budgeted. The second is the one buyers rarely see coming, because it compounds the first. In some states transfer duty is calculated on the goods-and-services-tax-inclusive price, so losing the concession means funding the tax and then paying duty on the tax as well. Even where you can later claim the tax back as a GST credit, which is a question for your registered tax agent, the settlement cash has to cover it on the day and the extra duty is calculated on it. It is a tax on a tax, and it is why the concession is worth more than its headline. The third is timing. The margin scheme is the usual mitigation, but it has a gate: it has to be agreed in writing before settlement, which means it is a question for the contract negotiation, not for the week of settlement.
The three GST conditions are cumulative, and they sit on top of the requirement that what is sold is actually a going concern, meaning the sale includes everything necessary for the enterprise to continue and the seller carries it on until the day of sale. The conditions are: the sale is for payment; the purchaser is registered or required to be registered for goods and services tax; and the purchaser and seller have agreed in writing that the sale is of a going concern. Missing any single one of them puts the tax back on the price. Australian Taxation Office, Selling a going concern, page's own last updated date 15 December 2022, read at source 10 September 2026. Conditions are cumulative and all must be met. Whether any particular sale qualifies depends on what is actually supplied. Not tax advice; refer to a registered tax agent.
One warning belongs here and it is stated as a warning only. Because a lease is what makes the enterprise argument available, there is an obvious temptation to manufacture one shortly before settlement in order to reach the concession. Do not go down that road, and do not accept it if it is suggested to you. A lease that exists to satisfy a tax test rather than to let premises is exactly what the revenue authorities look for, the consequences land on both parties, and it is not a structure any broker or adviser should be helping you build. If the concession is genuinely unavailable, price it in and negotiate around it. The going concern definition sets out what the term properly means, the comparison against a purchase with income already in place is in the guide to buying a commercial property with an existing tenant, and the wider set of commercial and development finance is on the property lending hub.
| Item | Tenanted position | Empty position | Who decides it |
|---|---|---|---|
| Going concern treatment | Available where the property and all leases, agreements and covenants are included in the sale and the cumulative conditions are met. | A property by itself is not a going concern, and a vendor who never leased it has no leasing enterprise to supply. Live only where a leasing enterprise is genuinely carried on to completion. | The tax office rules, applied to your facts by a registered tax agent |
| Goods and services tax on the price | Can be nil where the supply qualifies as GST-free. | Generally payable, and the buyer funds it in the settlement cash. | Whether the concession is genuinely available |
| Transfer duty base | Calculated on the price, with no tax component to include where the supply is GST-free. | Calculated on the goods-and-services-tax-inclusive price in some states, so the concession is lost twice. | The revenue office in the state or territory where the property sits |
| Margin scheme | Usually beside the point where the going concern concession applies. | The usual mitigation, but it must be agreed in writing before settlement. | The parties, in the contract, before completion |
| Written agreement between the parties | Required, as one of the cumulative conditions. | Required if the concession is claimed, and it does not by itself create an enterprise. | Your solicitor, drafting to your tax agent's advice |
| Total cash to complete | Deposit plus costs, with the advance struck against a value derived from the lease. | Deposit plus costs plus any tax and additional duty, with the advance struck against the empty-building value. | Your lender's valuation basis and your tax position, together |
What are the steps to buy an empty commercial building with a loan?
Buying an empty commercial building with a loan runs in eight stages, from checking the valuation basis before you offer to reviewing the loan once a tenant signs, and the order matters more than on a tenanted purchase because nothing is paying the loan while you work through them. Most of what goes wrong on these files is sequencing: a contract signed before anyone has asked how the building will be valued, a finance date too short for a lender-instructed valuation, or a leasing agent appointed after settlement instead of before it.
| Stage | What happens | What to do, and who handles it |
|---|---|---|
| Before you offer | The lender may value the property on the basis that it is empty, and there is no lease income to carry the servicing. | Ask your broker which valuation basis and servicing route fit before you negotiate from the asking price. If an SMSF is borrowing, have the SMSF adviser and registered tax agent confirm the business real property position first. |
| Offer and contract | The contract fixes the finance deadline, settlement date and the tax treatment the parties have agreed to claim. | Have your solicitor make the finance condition fit the amount and terms you actually need, and settle the going-concern or margin-scheme position with your registered tax agent before signing. |
| Valuation and credit assessment | The lender instructs the valuer and tests whether the file still works without rent from the property. | Your broker should run the valuation, servicing evidence, reserve and leasing plan together. Do not wait for one to finish before starting the next. |
| Formal approval | The approval can arrive with conditions that still have to be satisfied before the lender will settle. | Have your broker and solicitor read every condition against the settlement date, especially anything involving insurance, additional security, evidence of funds or the exit from a short-term facility. |
| Before settlement | The cash to complete, insurance position, GST registration and leasing plan all have to be ready even though the property is still producing no rent. | Your solicitor and registered tax agent confirm settlement tax treatment; your insurer confirms cover for an unoccupied building; your leasing agent can start the marketing process so the vacancy is being managed rather than merely hoped away. |
| Settlement | You fund the deposit, costs and any GST or duty that falls into the settlement statement, while the loan is advanced against the lender-supported value. | Have your solicitor reconcile the settlement statement and your registered tax agent confirm what may later be creditable. The finance plan should already include the vacancy reserve after settlement. |
| Holding period | Rates, tax, insurance and debt costs continue while there is no tenant contribution, and the leasing evidence becomes part of the future refinance story. | Keep the agent agreement, listing history, enquiries and offers. Your broker should revisit the reserve and facility end date before the vacancy becomes a deadline problem. |
| A tenant signs, or the vacancy continues | A genuine arm's-length lease can change both the income evidence and the valuation basis. A continuing vacancy keeps pressure on the reserve and any short-term maturity. | Review the loan with your broker as soon as a tenant signs. If it stays empty, change the leasing, occupancy, sale or refinance plan early rather than waiting until the facility is close to expiry. |
What if finance is not ready by the finance date?
If the valuation, approval or loan conditions are still outstanding as the finance date approaches, the contract wording controls what rights you have, not the lender's internal status. Do not assume a pending approval automatically extends the deadline. Have your broker identify exactly what is still missing and what can be completed immediately, and have your solicitor deal with the finance condition before the contractual date passes. The useful distinction is between a credit problem and a timing problem: if the lender is comfortable but the valuation or documents are still in motion, an extension may be a contract-management issue; if the lender has not approved the amount you need, extending the date does not solve the underlying shortfall. General information only; your solicitor should advise on the contract.
What if the empty building is sold at auction?
If an empty commercial building is sold at auction, you usually bid unconditionally, so the finance, the valuation basis and the deposit all have to be settled before the day rather than after it. With no rent, the lender's view of the building rests on its own valuation and on your other income, so ask your broker to have the lender instruct its valuer and assess the file before auction day; an approval that is still waiting on a valuation is not the same thing. If the valuation still comes in below the hammer price, the contract does not bend and the gap is cash you fund, which is why your bidding limit should come from the lender's number, not the reserve.
In Victoria there is no cooling-off to fall back on, twice over. The cooling-off right in the Sale of Land Act 1962 does not apply to "land used primarily for industrial or commercial purposes", and separately it does not apply to a sale by publicly advertised auction. Other states and territories have their own rules, so confirm yours with your solicitor before you bid. Sale of Land Act 1962 (Vic), section 31, subsections (1)(a) and (5)(a), read 10 September 2026. General information only, not legal advice.
Can an agreement for lease change the valuation before settlement?
Potentially. A signed agreement for lease or other sufficiently firm tenant commitment can give the lender and valuer new evidence to consider before settlement, but it does not automatically turn a vacant-property valuation into a leased valuation or make the loan eligible for lease-doc assessment. Australian mortgage-security valuation guidance allows an alternative value based on a proposed lease to be reported on a special-assumption basis alongside the as-is market value, which is why the exact tenant document, commencement conditions and lender instruction matter. The practical evidence ladder is leasing campaign → heads of agreement → agreement for lease → executed lease → commenced contracted rent: each step is stronger than the last, but the lender decides at what point it is prepared to change the credit treatment. Send any tenant commitment to the broker before settlement rather than waiting for the original approval to complete unchanged. Australian Property Institute, ANZVGP 112, s 5.4, effective 1 January 2025. The guidance permits an alternative basis, including a proposed lease, as a special assumption reported alongside the as-is market value. Professional valuation guidance, not a lender approval rule.
What if a tenant signs before or after settlement?
A genuine arm's-length tenant can change the finance conversation as soon as there is evidence the lender is prepared to rely on. Before settlement, a signed heads of agreement, agreement to lease or lease may allow the lender to revisit its assumptions, but do not assume the purchase automatically becomes a lease-based deal: the lender decides whether the document, tenant and commencement terms are strong enough to change the valuation or servicing basis. After settlement, an executed lease and contracted rent are usually the trigger to review the loan, because the building can potentially be revalued on the leased basis and a short-term or private facility may be refinanced to longer-term debt. Where the lease is arm's length it may also become the servicing evidence a lease doc assessment reads. A related-party lease is different because the lender generally looks through it to the trading business. For an investor who buys empty on purpose, this revaluation is usually the point of the exercise, because it is when the difference between the empty-building value and the leased value becomes usable. Plan this exit before you buy, not after the tenant signs.
What if the building stays empty longer than planned?
If the building stays empty longer than planned, the pressure lands on the reserve and on any facility with a fixed end date, not on the valuation. The options are the ones any owner has: adjust the rent or incentives the agent is quoting, occupy some or all of it yourself, sell to an owner-occupier buyer, or refinance to a facility sized on your other income before a short-term loan reaches its end date. Raise it with your broker early rather than at the end date, because the refinance options narrow as the deadline approaches. If the loan is already in place and the question is a lender review, the guide to a covenant breach or interest-only expiry covers that path.
An empty commercial building is not automatically unfundable; it is a differently assessed property. With no contracted rent, the lender starts with the value of the building as it stands and then asks what income or exit carries the debt while the vacancy continues. Full-doc and alternative-documentation routes can still work where other income supports the debt, while a pure lease-doc pathway generally waits for a genuine arm's-length lease. Estimated market rent can support the valuation, but it does not become contracted income merely because a leasing agent expects it. If a tenant appears before settlement, the evidence can move from a leasing campaign to heads of agreement, agreement for lease and then an executed lease; send each new commitment to the lender because it can change the valuation or credit treatment without automatically changing it. There is no standard published Australian grace period for finding a tenant: any deal-specific leasing condition sits in the facility terms, while the valuer's estimated marketing period is a separate professional opinion. Holding costs continue while the building is empty, and vacancy also changes the property's insurance risk, so cover and any security or inspection conditions should be confirmed before settlement. The GST position depends on what enterprise the vendor is actually supplying, not just whether the property happens to have a tenant on settlement day. A previously leased building can remain part of a leasing enterprise during temporary vacancy while a new tenant is actively sought; a building never previously leased does not create one merely by being marketed. Before you buy, plan the valuation basis, the servicing source, the cash reserve, the contract deadline, the insurance and the exit. When a tenant signs, review the loan rather than assuming the original structure is still the best one.
Key takeaway: the agent agreement, the listing and the leasing correspondence you keep to protect your tax position are the same pack a credit team needs before it will lend against a building with no income, so assemble it once and make it do both jobs.Frequently Asked Questions
Yes, you can get a commercial loan on a property with no tenant, but the file has to work without rental income. The lender generally values the building on the basis that it is empty, then looks to the occupying business, other documented income or a credible short-term exit to service the debt. The amount available depends on the lender-supported value, the servicing evidence and the lender's own policy. If you are ready to test the facility itself, start with commercial property loans.
GST generally applies to the sale of commercial property, so the buyer funds it in the cash at settlement unless a concession applies. The going concern concession can make the supply GST-free, but only where the cumulative conditions are met and what is supplied is an enterprise rather than a bare property. The margin scheme is a separate mitigation and has to be agreed in writing before settlement. Whether a registered buyer can later claim the tax back as a GST credit depends on how the property will be used. This is general information and not tax advice, so confirm your own position with a registered tax agent.
Yes, a commercial property can be sold as a going concern, including one that is currently empty, but vacancy alone does not decide the GST treatment. A property that has previously been leased can remain part of a leasing enterprise during temporary vacancy while a new tenant is actively sought. A building that has never previously been leased does not create a leasing enterprise merely because it is being marketed. Whether a particular sale qualifies depends on the enterprise actually being supplied and the other going-concern conditions. Confirm the position with a registered tax agent.
A supply of a going concern is GST-free rather than exempt, and only where three cumulative conditions are all met: the sale is for payment, the purchaser is registered or required to be registered for GST, and the purchaser and seller have agreed in writing that the sale is of a going concern. What is sold must also actually be a going concern, meaning the sale includes everything necessary for the enterprise to continue and the seller carries it on until the day of sale. Missing any one of these puts the tax back on the price, and back into the cash you fund on the day.
In most Australian states you pay land tax on commercial property, and vacancy does not switch it off. In the Australian jurisdictions that impose land tax on commercial property, liability generally follows land value and ownership rather than whether a tenant is paying rent. The Australian Capital Territory does not apply land tax to commercial properties, and the Northern Territory does not impose land tax. Thresholds and rates differ by jurisdiction, so confirm the position with the relevant revenue office.
There is no general vacant property tax on untenanted commercial property in Australia. Residential vacancy charges exist in some jurisdictions and do not reach commercial, retail or industrial buildings left empty. What does reach commercial land in Victoria is the commercial and industrial property tax, which turns on land value and qualifying use rather than on whether the building is producing income, and which is separate from land tax.
There is no single deposit figure for a commercial property loan, and on an empty building it moves with the valuation basis. Your cash requirement is the purchase price and costs less the maximum amount the lender will advance against the value it accepts. Because an empty building can be valued differently from a leased investment, the valuation basis can change the deposit even before the lender's maximum loan-to-value policy is considered.
There is no standard loan to value ratio for a commercial property: each lender sets its own maximum against its own valuation, and no Australian regulator or industry body publishes a figure. There is no universal Australian rule that automatically cuts the LVR simply because a commercial property is vacant. Vacancy can still reduce the amount available because the lender may use a different valuation basis and there is no lease income to support servicing. The practical question is therefore both the percentage the lender will use and the value and income evidence that percentage is being applied to.
If the lender's commercial valuation is lower than the purchase price, the loan is usually recalculated from the lower lender-supported value, so the reduction in borrowing becomes extra cash you need to find unless the price, lender, security or structure changes. On an empty building, first check whether the gap comes from the vacant valuation basis rather than assuming the valuer has made a mistake.
There is no standard Australian commercial-loan grace period for finding a tenant published by a regulator, industry body or lender in the sources reviewed for this guide. A lender may still impose a deal-specific leasing condition, reserve requirement or exit deadline. Get any such condition, the evidence required and the consequence of missing it in writing.
The contract wording controls what happens if finance is not ready by the finance date. Do not assume a pending valuation or approval automatically extends the deadline. Before the date passes, have the broker identify exactly what remains outstanding and have the solicitor advise on the finance condition, any extension request and the consequences of proceeding without satisfactory finance.
Yes. A genuine signed lease is usually a sensible trigger to review the loan because contracted rent gives a lender income it can assess and can support a valuation on the leased basis. A short-term or private facility may then be refinanced to longer-term debt, and an arm's-length lease may support a lease doc assessment. The result depends on the lease terms, tenant, value and lender policy.
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