Caravan Park LVR: How Permanents and Cabins Change It
A park's LVR turns less on how many permanents it has than on who owns the dwelling on each site and whose occupancy the law protects. Here is why.
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Caravan Park LVR · Permanent Site Security · Valuation
Caravan Park LVR: How Permanents and Cabins Change It
Every caravan park listing quotes a permanent-to-tourist ratio, and most buyers assume that ratio sets the gearing. What actually moves the LVR band is whether the park owns the structure standing on each site, and whether the occupancy on that site is protected by law.
Also called: holiday park finance, tourist park finance, residential park finance.
What sets the LVR on a caravan park?
The LVR on a caravan park is set by two things: what the lender can actually take as security, and what the valuer is allowed to assume about the land's future use. Everything else, including the permanent-to-tourist ratio quoted at the top of the listing, feeds into those two through the site schedule rather than around them.
When a park file lands for assessment, the first document that gets pulled apart is not the profit and loss. It is the site schedule: how many sites there are, what is standing on each one, who owns that structure, and what agreement the occupier holds. A park with ninety sites might have a security position built on ninety structures, or on twelve. Those two parks do not gear the same way, and they can carry identical income.
This is where the usual framing goes wrong. Plenty of good material, including our own guide on how to buy a caravan park, correctly explains that a steady base of permanent and annual sites reads as low-risk recurring income. That is true, and it is a serviceability point. It is not an LVR point. Income quality tells the lender whether the debt can be serviced. Security composition tells it how much debt it is willing to secure in the first place, and in practice those two answers pull in opposite directions on a permanent-heavy park.
Who owns the dwelling on a permanent site?
On a permanent site, the dwelling is very often owned by the resident, not by the park. The park owns the ground, the services and the common property, and leases the site to a resident who owns the home standing on it. That arrangement is a land lease community, and it is a materially different thing from a tenancy.
The NSW regime states the position plainly: in a residential land lease community, the resident owns the home and leases the land where the home sits from the community operator. The operator must give a disclosure statement, a written site agreement, a condition report and a cooling-off period. Equivalent regimes apply in most states under their own legislation and their own terminology, so read the one that governs the park you are buying rather than assuming the NSW position travels.
From a security point of view, that is the whole ballgame. A leasehold interest held by a resident over a site does not put the resident's dwelling on the park's asset register. Whatever the park's LVR turns out to be, it is not being calculated against those structures, because the park does not own them and cannot offer them.
| Site type | Who owns the structure | Who holds the occupancy right | Part of the park's security |
|---|---|---|---|
| Tourist site | No permanent structure, or park-owned amenities only | Guest, on a short booking with no continuing right | The land and the site works, yes |
| Park-owned cabin | The park | Guest or occupier, with no ownership interest | Yes, though how it is taken depends on whether it reads as part of the land or as goods |
| Annual site with resident-owned van | The occupier owns the van or annexe | Occupier, on an annual or seasonal arrangement | The land only, not the van |
| Permanent site with resident-owned dwelling under a site agreement | The resident | Resident, under a statutory site agreement | The land only, and encumbered by the agreement |
Read down the last column and the point resolves itself. A cabin the park owns and a home the resident owns look identical from the driveway. On a security schedule they are opposite entries.
Does a protected occupancy change what the park is worth to a lender?
A protected occupancy changes what the park is worth to a lender because it changes what the land can be assumed to become. Valuation of a going concern park is not purely a capitalisation of current income. It carries an assumption about the highest and best use of the land, and a statutory site agreement puts a long-dated constraint on that assumption.
Sites carrying protected residents cannot simply be cleared and repurposed for tourist use, or for anything else, at the operator's convenience. The agreements run, the disclosure and termination protections apply, and the practical horizon on changing that site's use is measured in years rather than seasons. A valuer working on the going concern figure has to reflect that, and where a large share of the park sits under those agreements, the number lands differently from an otherwise identical park with a tourist-weighted schedule. The mechanics of that are covered in more depth in valuation and in our read on how a lender reads a large freehold holiday park.
None of this makes a permanent-weighted park a worse asset. It frequently makes it a better one to operate, with steadier occupancy rights and lower churn. It does mean the lender is securing a narrower thing, against a valuation carrying a firmer constraint, and the gearing reflects both. If you are weighing a park with a large permanent cohort, it is worth mapping the site schedule before you go anywhere near a lender. Start a conversation and we can read it with you.
How do park-owned cabins sit on the security schedule?
Park-owned cabins sit on the security schedule as part of the park's asset base, and they are the reason a cabin-heavy park can gear closer to the top of its band than a park of the same size with the same income. The park owns them, so they are available to be secured, and they carry value that a resident-owned dwelling on the next site over simply does not contribute.
How that value is taken is a separate question, and a well-worn one: whether a cabin reads as a fixture forming part of the land or as goods capable of being financed under a chattel mortgage. That question is answered in full in our post on whether cabins are a chattel or a fixture to a lender, and there is no value in re-arguing it here. The point for LVR purposes is narrower: the cabin is on the schedule either way, and the resident-owned dwelling is not on it at all.
Worth naming a trap that catches buyers. A schedule that lists a hundred and ten structures is not automatically a hundred and ten items of security. Ask the agent which of them the park actually owns, in writing, and reconcile that count against the site agreements. Listings routinely present total structures on site as though the vendor owns all of them.
What does the site mix do to the gearing band?
The site mix moves the gearing band by moving both halves of the calculation at once: the proportion of structures the park owns, and the strength of the assumption behind the land value. The three tiers below are the ones that show up most often, and they are indicative positions, not lender policy.
Mostly tourist sites
A tourist-weighted park usually gears at the upper end of the range, because the park owns most of what is standing on it and the land carries the least constrained use assumption. On a freehold park, the indicative gearing band runs to roughly two thirds of the going concern valuation, varying by lender, and a tourist-weighted schedule is where the top of that band is realistically available. The trade is on the income side, which is more seasonal and more exposed.
A balanced mix
A balanced park is generally assessed inside the same indicative band but read more conservatively, because part of the site schedule contributes land value only. This is the most common shape in the market and the one where the individual composition matters most: two balanced parks can be assessed differently on the strength of who owns the structures on the long-stay sites.
Mostly permanent sites with resident-owned dwellings
A permanent-weighted park with resident-owned dwellings is generally assessed below the indicative band, and in some cases materially below it, because the securable asset narrows to land and common property while the valuation carries the constraint described above. In practice these are the deals where a larger deposit does the work, and where a clean, verified site schedule is worth more to the file than another year of trading history.
| Site mix tier | What the income looks like | What the valuation assumption is | Indicative gearing |
|---|---|---|---|
| Mostly tourist | Seasonal and rate-sensitive, higher yielding in peak, thinner off-season | Least constrained, sites can be reconfigured or repriced season to season | Typically the upper end of the indicative range, varies by lender |
| Balanced mix | Part recurring, part seasonal, less exposed to a soft summer | Partly constrained, depending on how many sites carry agreements | Typically inside the indicative range but assessed more conservatively |
| Mostly permanent with resident-owned dwellings | Steady and recurring, low churn, limited upside per site | Most constrained, protected occupancy limits any change of use | Typically below the indicative range, varies by lender and by schedule |
How much deposit do you need for a caravan park?
The deposit on a caravan park is whatever the going concern valuation does not support, which on a freehold park typically means somewhere around 30 to 40 per cent of the purchase price, and more where the site schedule narrows the security. That figure is indicative and varies by lender, by how the trading record reads and by how much of the park's asset base the operator actually owns.
Two adjustments are worth planning for before you sign. The first is the composition adjustment described above: a permanent-weighted schedule generally means a larger cash contribution than the same purchase price on a tourist-weighted park. The second is that the going concern figure and the asking price can sit some distance apart, and that gap is the buyer's to cover. Both are visible early if the site schedule is verified early, which is the single most useful thing a buyer can do before approaching caravan park finance.
In practice, the buyers who move fastest on these deals are the ones who arrive with the schedule reconciled, the agreements sighted and the ownership of each structure confirmed. Everything else on the file is negotiable around that. The broader lane view sits in the accommodation finance hub, and it is worth reading alongside this before you commit to a structure. What a lender wants sighted before it will confirm a gearing band is listed in the accommodation acquisition lender document pack.
A caravan park's gearing is not a function of its permanent-to-tourist ratio. It is a function of two things the ratio does not tell you: how many of the structures on site the park actually owns, and how many sites carry an occupancy the law protects. Park-owned cabins are securable and lift the band. Resident-owned dwellings under a site agreement contribute income but no security, and they constrain the valuation assumption behind the land underneath them. Two parks with identical ratios, identical income and identical prices can be assessed several points apart on that basis alone.
Key takeaway: Get the site schedule verified before you negotiate, because ownership of the structures, not the ratio in the listing, is what sets the number.Frequently Asked Questions
Whether owning a caravan park is profitable is a question a lender answers through the site schedule rather than through the headline yield on a listing, because the income a bank will actually underwrite is the income attached to sites the park controls. Tourist trade is higher yielding and more volatile. Long-stay income is steadier but is often attached to sites where the park owns nothing but the ground. A park can be genuinely profitable and still gear conservatively, which is a funding outcome rather than an operating one, and our guide to buying a caravan park covers the operating side in full.
How much you can borrow against a caravan park is set as a proportion of the going concern valuation, not of the land value alone, and the indicative band for a freehold park typically sits around 60 to 70 per cent, varying by lender and by the composition of the security. There is real spread in the market on this figure, so treat any single number as indicative only. Where a large share of sites carry resident-owned dwellings and protected occupancy, expect the assessed band to sit below that range. The loan to value ratio entry explains how the proportion itself is calculated.
A holiday park loan works as a commercial going concern facility, which means the lender funds the land, the improvements and the operating business as one trading whole rather than as a straight property purchase. The valuation is prepared on a going concern basis, the security schedule lists which structures form part of the asset, and serviceability is read off the park's trading performance. Loan terms and amortisation are typically shorter than a residential facility and vary by lender, and the lender read on a large freehold holiday park walks through a worked version of the same assessment.
Permanent residents in a caravan park frequently do own their home and lease only the site it stands on, which is the defining feature of a land lease community. Under those arrangements the resident receives a disclosure statement, a written site agreement, a condition report and a cooling-off period, and the dwelling itself is the resident's asset rather than the park's. That single fact is what keeps those structures off the park's security schedule, and it is why a leasehold interest over a site behaves so differently from a tenancy in a funding assessment.
Financing a park with mostly permanent sites is possible and is done regularly, but it is generally assessed at a more conservative gearing level than a tourist-weighted park of the same value. The reason is not income quality, which is usually better on long-stay sites, but security composition and the valuation assumption behind the land. A larger deposit and a clear site schedule are the two things that move these deals forward, and the security entry sets out what a lender is actually taking.
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