When Your Landlord Offers to Sell the Building You Practise In
Buying Commercial Premises You Lease | Switchboard Finance
Whitecoat Hub
Owner-Occupier · Commercial Premises · Lease to Own
When Your Landlord Offers to Sell the Building You Practise In
The conversation usually starts quietly. Your landlord is selling, and they have offered the building to you first. Here is how a lender reads a sitting tenant buying the premises they already trade from, what passes, and what stalls.
Quick Answer
Yes, you can buy the commercial premises your practice leases, and sitting in the building already works in your favour. As an owner-occupier, lenders weigh your security and deposit closely, and a commercial property loan is the usual path to settle it.
The day your landlord offers to sell
If your landlord offers to sell you the building, the honest first answer is that you are in a stronger spot than almost any other buyer. You already know the premises, the location and the patient flow, and you have been paying rent there long enough to prove the address carries a working practice. That is the sitting-tenant advantage, and it is the thread the rest of this post pulls on.
The question practice owners ask me is simple: can I buy the commercial property I currently lease? In almost every case, yes, and the path runs through an owner-occupier commercial property loan rather than an investor loan, because you and your business will occupy the building. The difference matters for how a lender reads the deal, and it is worth understanding before you reply to the landlord. If you want the wider context on the tenant to owner move, the Whitecoat Hub sets out the full picture for practice owners.
Why the sitting tenant has the advantage
The sitting tenant has the advantage because the lender does not have to imagine the building working as a practice. You have already shown it does. In practice, the sitting tenant walks in with something a fresh buyer cannot fake: a clean record of rent paid at that exact address, which counts as rental history as evidence that the premises supports the income that will service the loan.
That evidence feeds the owner-occupier read, where the lender lines up your trading figures, the rent you have been paying and the building's standalone value. Where all three agree, the file moves. Where they pull apart, it slows. The card below splits the two outcomes.
What makes the read pass
- A clean rent ledger at the address, paid on time
- The lease and trading sit in the practice entity
- Deposit is ready and clearly sourced
- Trading history matches the rent you have carried
- The building values as owner-occupier, not just investment
What makes it stall
- Patchy or disputed rent payments
- Deposit tied up and hard to evidence
- Personal and practice finances mixed together
- A valuation gap between the offer and the read
- No option to purchase agreed in writing
None of the items on the right are fatal on their own, but they are the things that turn a quick conversation into a slow one. A practice owner who tidies the rent ledger and separates the books first tends to get a cleaner read, as the owner-occupier equity tiers guide describes for the deposit side.
How the owner-occupier read works
The owner-occupier read works by testing the deposit and the valuation before anything else. In practice, the deposit and how the building values as owner-occupier carry the file more than the headline price does. Owner-occupier commercial deposits typically sit around 20 to 35% of value, indicative and varies by lender, and the gap between what you have and what the lender wants is usually the real conversation. If you want to know where you would land before you reply to the landlord, you can check where you stand in a few minutes.
Valuation is its own step. The building is assessed on its own merits, and the figure the valuer lands on can sit below the price you and your landlord agreed, especially on a negotiated off-market sale. The Australian Property Institute sets the valuation standards practitioners work to, which is why the lender's number can differ from the asking figure. Where a deposit gap opens up, some owners release equity from a home or another property through a second mortgage rather than wait years to save the difference.
Keep leasing, or buy the building you sit in
Deciding whether to keep leasing or buy the building you sit in comes down to certainty and control, not just the monthly number. Owning ends the risk that a future landlord raises the rent, sells to someone else, or declines to renew the lease that your patient base is built around. Against that, buying ties up a deposit and adds a commercial facility to your obligations, so the decision deserves the same care as any practice investment.
The hinge is the option to purchase. In practice, the option to purchase is what turns a quiet conversation into a deal you can finance, because it gives you a written right to buy on agreed terms inside a set window. With that in hand, you can line up the deposit, get the valuation done and structure the facility without the landlord selling out from under you. Your LVR and the deposit decide how much you need to bring, and the Whitecoat finance pack walks through the documents a practice owner needs to move quickly. If rates are part of your timing question, the commercial property loan rates guide covers what shapes the cost.
Being the sitting tenant is the strongest hand you can hold when your landlord offers to sell, because your rental history as evidence and your trading at the address do most of the work in the owner-occupier read. The deposit and valuation decide the rest, and a second mortgage can release the equity to close a deposit gap without disturbing your existing loans.
Key takeaway: Secure the option to purchase in writing, then get the deposit and valuation mapped before you commit to a price.Frequently Asked Questions
Yes, you can buy the commercial property you currently lease, and being the sitting tenant usually strengthens the read rather than weakens it. Lenders treat your trading and rent payments at the address as evidence the building supports a business, which is exactly what an owner-occupier commercial property loan is built around. The two things that decide it are the deposit you can put forward and how the building values.
The deposit to buy your leased premises depends on how the lender reads the building and your trading, and owner-occupier commercial deposits typically sit around 20 to 35% of value, indicative and varies by lender. Where the deposit gap is real, some owners release equity from another property to bridge it rather than waiting. A broker can map the deposit against the lender's LVR before you commit.
Your rental history does help when buying the building you lease, because a clean record of paying rent at that address is rental history as evidence the premises carries a viable practice. Lenders use it to support the owner-occupier read alongside your trading figures and the building's standalone value. A patchy or disputed rent ledger works against you, so it is worth tidying before you apply, as our owner-occupier equity guide explains.
An option to purchase in a commercial lease is a written right that lets you, the tenant, buy the premises from the landlord on agreed terms within a set window. It turns a casual offer into something you can plan and finance around, and it gives a lender a clear contract to assess against your security position. Getting the option drafted properly is a legal and valuation question, so confirm the terms before you rely on them.
Whether you use a second mortgage or a commercial property loan to buy your premises depends on where the money is coming from and what you already own. The commercial property loan funds the purchase of the building itself, while a second mortgage can release equity from another property to cover the deposit gap. Many practice owners use both together, and our premises comparison guide walks through when each one fits.
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