The Land Under a Holiday Park: How a Commercial Loan Reads It
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Commercial Property · Holiday Park Land · Freehold
The Land Under a Holiday Park: How a Commercial Loan Reads It
Buying a large freehold holiday park means buying land first and a business second. The lender that funds the dirt is not reading your nightly tariff sheet. It is reading the parcel, the site income and a going-concern valuation, and that is a different number from the price on the contract.
Quick Answer
A holiday park sits on one title but reads as two assets: the land and the trade. A commercial property loan funds the freehold leg, sized against a going-concern valuation, not the asking price. Land quality and site income set the number.
A Holiday Park Is Two Assets on One Title
A holiday park is two assets on one title: the land and the trade. A commercial property loan funds the freehold leg, the dirt and its fixed improvements, while the going concern, the bookings, tariffs and goodwill, is assessed separately. Knowing which lender is reading which asset is the whole game on a large park.
On a freehold park you own the land outright, so the commercial loan is secured against the parcel itself. That is structurally cleaner than a leasehold park, where the security is a lease and a going concern with a finite term. Hold the frame of the land and the trade on one title: a commercial property loan is fundamentally a loan against the land, sized by what an independent valuer says the freehold is worth, not by what the operator hopes the business earns.
How a Commercial Valuation Reads Park Land
A commercial valuation reads park land as a large, lightly improved freehold parcel that earns site income, not as a row of cabins. The valuer's task is to land on a going-concern valuation the lender can rely on, and the method matters more than the sticker price.
Valuers working to the standards set by the Australian Property Institute typically capitalise the park's sustainable site income and sense-check it against comparable land sales. A large, lightly improved freehold parcel with strong, steady site income reads well. A parcel carrying heavy capital improvements that do not lift the income reads as a risk, because a valuer cannot bank value the market will not pay for. The number a credit team lends against is this valuation, not the contract price, and that distinction is where most big-park deals are won or lost.
Freehold and leasehold park land read very differently to a commercial lender, and that split shapes the structure before any number is set.
The site income behind the land valuation
Because a commercial valuation on park land is built from site income, the income read is what actually moves the number, not the land area on its own. A valuer is asking how much of the take is steady and how much rides on a short summer, because a lender can only bank income it believes will still be there next year. It is the same income that later sets your borrowing capacity against the land, so the work you put into presenting it cleanly pays twice, once in the valuation and again in the loan a lender will write against the parcel.
A solid base of permanent and annual sites under the tourist trade reads as steady, year-round income, and that is what lifts a going-concern land valuation. A park that earns almost everything in a few peak weeks reads as thinner and more seasonal, so the valuation comes in more cautiously even when the gross takings look strong. The same logic runs through the improvements on the land: a cabin block or amenities upgrade only adds to the value where it lifts the income, and a clean title with no encroachments or remediation flags keeps the parcel simple to lend against. Present the income honestly, with the off-season shown rather than glossed over, and a credit team can get comfortable with the land value. Gloss over it, and the valuer prices the uncertainty straight back into a lower number, which then sets a lower loan against the parcel.
LVR on a Freehold Park, and the Gap You Cover
On a freehold park, a commercial property loan typically advances around 60% to 70% LVR against the going-concern valuation (indicative, varies by lender), which is lower than a plain commercial building. The reason is the specialised, income-dependent nature of the asset.
LVR on a specialised commercial asset like a park sits below what a standard office or retail building attracts. Where a generic commercial building might gear higher, a park is read as a going concern with income that can move with the season, so lenders hold back. If the going-concern valuation lands under the contract price, the valuation gap is yours to cover in cash or additional security, on top of the deposit. This is the single most common surprise on a large park purchase, and it is why the valuation should be understood before the contract goes unconditional. Specialist and non-bank funders who lend on caravan park finance read this asset class far more comfortably than a major bank that rarely sees one.
The Freehold Leg, the Trade, and the FY27 Question
Most large freehold park buyers take an owner-occupier commercial property loan on the freehold leg and run the trade themselves. That structure keeps the land and the operating business under one owner, which lenders read as aligned rather than at arm's length.
An owner-occupier commercial property loan on the freehold leg is the common path: you hold the land and operate the going concern, and serviceability is read off the park's trading cash flow. Passive investors who buy the freehold to lease it to a separate operator sit in a different lane. For those investors, one announced measure is worth noting: from 1 July 2027 the Budget proposes to limit negative gearing to new builds, a change that is announced and not yet law, so today it is a planning input rather than a settled rule. Owner-operators running the park themselves are largely outside that question. If pricing is your focus, the current read on commercial property loan rates is a useful companion, and the freehold bricks valuation read on a motel shows the same land-versus-trade split play out in a different format.
A large freehold holiday park funds as land first and a business second. A commercial property loan reads the freehold leg through a going-concern valuation, advances a conservative LVR against it, and leaves any valuation gap for you to cover. Get the valuation understood before the contract goes unconditional, and match the deal to a lender that actually lends on parks.
Key takeaway: on a freehold park, the going-concern valuation, not the asking price, sets what a commercial property loan will advance.Frequently Asked Questions
You can get a commercial property loan on caravan park land, and it is one of the standard ways to fund a freehold park. The loan is secured against the freehold parcel and sized on a going-concern valuation of the land and its site income, not on the cabins or the asking price. Specialist and non-bank funders who lend on caravan park finance are usually more comfortable with the asset than a major bank.
Lenders value the land under a holiday park by capitalising its sustainable site income and cross-checking against comparable land sales, working to recognised valuation standards. A large, lightly improved freehold parcel with steady income reads well, while heavy improvements that do not lift the income add little to the figure. The result is a going-concern valuation the lender relies on instead of the contract price.
The LVR on a freehold caravan park typically lands around 60% to 70% against the going-concern valuation (indicative, varies by lender), lower than a plain commercial building. A park is a specialised, income-dependent asset, so lenders hold back more. It is worth reading how LVR works and how a commercial property loan is structured before you size a deposit.
A freehold park is generally easier to finance than a leasehold one, because the commercial loan is secured against land you own outright rather than a lease with a finite term. A leasehold park is funded more like a going concern business than a property, which narrows the lender pool. The freehold versus leasehold split is the first thing that shapes the structure of the deal.
If the valuation comes in under the purchase price, the shortfall, the valuation gap, is yours to cover in cash or extra security on top of your deposit, because the lender advances against the lower going-concern valuation. This is the most common surprise on a large park purchase, so the valuation is worth understanding before the contract goes unconditional. Reading the current commercial property loan rates early can help you stress-test the numbers.
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