Buying an Accommodation Business in FY27: What the Budget Changes
Buying an Accommodation Business FY27 | Switchboard Finance
Accommodation Finance
Vendor Finance · Going-Concern Buy-In · FY27
Buying an Accommodation Business in FY27: What the Budget Changes
A new financial year resets how an accommodation purchase is planned. Most FY27 buyers structure a going-concern buy-in, fund the bulk on the trading valuation, and use a vendor carry for the last slice the senior facility will not reach. The Federal Budget 2026-27 changes the backdrop, not the mechanics.
Quick Answer
Buying an accommodation business in the new financial year usually means a going-concern buy-in, funded on the trading valuation, with a vendor carry covering the last slice your senior lender will not. The Federal Budget 2026-27 measures shape the timing, not the structure. See how vendor finance fits.
What buying an accommodation business in FY27 really involves
Buying an accommodation business in FY27 is, in almost every case, a going-concern buy-in: you purchase the land, building and trade as one and fund it on the combined trading valuation, not on the bricks alone. A motel, park or small hotel is bought as a working business, so the lender sizes the facility on what the going concern earns, and the valuation can land under the contract price.
That gap, between what a senior lender will advance and the price you have agreed, is where the structure is decided. The senior facility funds the bulk, your own equity sits underneath, and a vendor carry can cover the last slice that gets the deal done. It is the same shape whether you are a first-time operator or adding a second site, and it is the reason two buyers paying the same price can need very different deposits.
What the Federal Budget 2026-27 changes for an FY27 buyer
The Federal Budget 2026-27 changes the planning backdrop for an FY27 acquisition, not the way a deal is funded. The headline measures for a small-business buyer are the permanently extended instant asset write-off from 1 July 2026, a reintroduced loss carry back from 2026-27, and three years of rollover relief for businesses restructuring out of discretionary trusts. All of these are announced, not yet law, so they belong in your plan as direction, not as a guarantee, and the general guidance on buying an existing business from business.gov.au still applies first.
Why it matters for an accommodation buy-in: a buyer weighing fitout, refurbishment or a structure that sits in a trust now has a clearer FY27 picture to plan against. The measures do not lift how much a lender will advance, and they do not change the going-concern read, but they can shape when and how you commit. Treat them as the reason FY27 is a sensible window to plan a clean entry, then build the funding on the valuation as you always would.
Where the vendor carry fits, and how much it covers
A vendor carry sits inside the capital stack as a layer behind the senior facility, never in front of it. The seller becomes a short-term lender for part of the price, usually registered as a second mortgage or general security behind your main lender, and your equity fills the rest. As a rough guide a carry carries 10 to 25 percent of the price, indicative and varies by lender, with the senior facility funding the largest share against the going concern.
Seen from the underwriter's seat, the carry is not the headline number, it is a ranking question: the senior lender wants clean first call and proof the trade covers both repayments before it consents to sit in front of a second layer. That is the same read a senior credit team runs on a vendor carry in a motel expansion, and it is why the structure should be set before contracts are signed rather than after. If the freehold is large enough to stand on its own facility, a commercial property loan on the bricks can do part of the same job.
Stronger fit
- Senior lender funds the bulk and consents to the carry ranking behind it
- Carry is a modest last slice, not the bulk of the price
- Combined trade covers the senior facility and the carry with margin
- A refinance exit is mapped before contracts are signed
- Carry is solicitor-prepared, business-purpose credit
Gets tricky
- No written consent from the senior lender to rank behind
- Carry so large the buyer holds little real equity
- Trading cannot cover both repayments comfortably
- No exit, so the carry has nowhere to go
- Vague terms with no priority deed and no registration
Lining up a clean FY27 entry
A clean FY27 entry is mostly about sequencing the funding before you commit to a price. The carry is cleared by refinance over two to five years, varies by lender, once the business has a trading record a new senior facility can read, so the exit belongs in the plan from day one, not improvised at the end. Where this commonly comes unstuck is a buyer who agrees a price first and works out the stack afterwards, only to find the senior lender will not sit in front of the carry on those terms.
The order that works is the reverse: confirm the going-concern read, size the senior facility, then shape the carry and the exit around it, the way a going-concern valuation is built up before a number is agreed. Mapping the exit strategy up front is what makes the carry fundable, and it is what turns a willing seller and a fair price into a deal that completes. For the wider picture across motels, parks, pubs and management rights, the accommodation finance hub sets out where each product fits.
Buying an accommodation business in FY27 is a going-concern buy-in funded on the trade, with a vendor carry covering the last slice the senior facility will not reach. The Federal Budget 2026-27 measures, all announced and not yet law, make FY27 a sensible window to plan a clean entry, but the funding still rests on the going-concern read and a mapped exit.
Key takeaway: Size the senior facility on the going concern first, then shape the vendor carry and its exit around it, before you agree a price.Frequently Asked Questions
Vendor finance when you buy an accommodation business works by the seller carrying part of the purchase price as a loan that sits behind your senior facility, rather than you funding the whole price on settlement day. It usually covers the last slice that gets the deal done, documented as solicitor-prepared, business-purpose credit. The senior lender still funds the bulk against the going-concern valuation. See how vendor finance is structured.
A vendor carry on an accommodation purchase typically carries 10 to 25 percent of the price, indicative and varies by lender. Your senior facility still funds the largest share and your own equity sits underneath, so the carry is a layer rather than the whole deal. The exact slice depends on what the senior lender will consent to. See where a second mortgage ranks.
The Federal Budget 2026-27 measures shape the timing of an FY27 accommodation purchase more than the structure of it. Measures such as the reintroduced loss carry back and the permanent instant asset write-off are announced, not yet law, so they inform planning rather than guarantee an outcome. The funding still rests on the going concern and your equity, so speak to a broker before you rely on any measure.
A going-concern buy-in is buying the accommodation business as a trading whole, with the land, building and trade valued and funded together rather than as separate parts. Lenders size the facility on that combined trading valuation, which is why the figures can read differently from a bare property purchase. It is the standard way motels, parks and similar assets change hands. See going concern explained.
A vendor carry is usually cleared by refinance over two to five years, varies by lender, once the business has a trading record a new senior facility can read. As the going-concern valuation firms up, the refinance pays out the vendor's layer and leaves a single clean facility. Mapping that exit strategy before contracts is what makes the carry fundable in the first place.
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