Freehold vs Leasehold: the FY27 Accommodation Finance Map
Freehold vs Leasehold Accommodation | Switchboard Finance
Accommodation Finance
Freehold vs Leasehold · Going Concern · FY27
Freehold vs Leasehold: the FY27 Accommodation Finance Map
Two motels can sell for the same price and fund completely differently. The reason is tenure: whether you own the freehold or hold a leasehold sets what a lender will gear, and that decision shapes the whole FY27 deal. Here is the map across motels, pubs and parks.
Quick Answer
The freehold versus leasehold decision is the first thing that shapes an accommodation purchase, because tenure sets how much a lender will gear and how early you need to plan the deposit. A freehold going concern is financed on the whole asset; a leasehold is capped by the lease. The accommodation finance hub maps both.
Why freehold versus leasehold decides the rest
Buyers tend to fixate on the asking price; a lender starts with the tenure, and that is what makes freehold versus leasehold the decision that sets every other number in the deal. Own the freehold and you hold the land, the buildings and the operating business as one going concern; take a leasehold and you buy the business on a lease, with no real property attached.
The first thing a lender reads is the tenure, because it tells them whether there is real property to take security over, and that single fact moves the deposit, the loan term and the list of lenders who will even look at the deal. Across the accommodation finance hub, from motels to pubs to holiday parks, the same rule holds: tenure first, price second.
A growing market behind the FY27 window
The market you are buying into is growing, which matters for anyone weighing a purchase in the FY27 window. Tourism is a large and expanding part of the economy, and accommodation has been one of its strongest engines, so a well-bought going-concern asset sits in a sector with real momentum behind it.
Those are sector numbers, not a forecast for any single venue, but they frame why lenders still compete for clean accommodation deals. A steady, documented trading history in a growing market is what gives a lender room to look past one uneven year. The macro tailwind does not change the gearing, though; that is set by tenure, which is where the map really starts.
Tenure sets the gearing
Tenure sets the gearing, so the same purchase price funds very differently depending on whether you own the bricks. A freehold going concern motel or holiday park is valued on the whole asset and gears the strongest of the tenures, indicatively around 60 to 70 percent of the going-concern valuation, varies by lender. A freehold pub turns on its gaming entitlement, which lifts the read with gaming and softens it without. A leasehold gears lower again and is capped inside the remaining lease term, because there is no land to secure.
Select your situation to see where the gearing tends to land.
Select your situation
Financed on the whole going concern
A freehold motel or holiday park is valued and geared on the going-concern valuation, the land and the trade as one asset, so it carries the strongest gearing of the tenures, indicatively around 60 to 70 percent of that valuation, varies by lender. Your deposit and any supporting security cover the rest.
Strongest gearingWhichever tenure you are weighing, supporting security changes the answer, and a commercial property loan only enters once you own a freehold to secure it against. The motel and pub lanes each read slightly differently, but the order is always the same: value the going concern, gear it by tenure, then close the gap with deposit or supporting security.
Plan the FY27 deposit and tax timing early
Planning the deposit early is what turns an FY27 purchase from a scramble into a structured deal, because the number you need is set against the going-concern valuation, not the asking price. The end of the financial year is now a timing window rather than a deadline: the instant asset write-off has been announced to become permanent from 1 July 2026 for smaller businesses, and while that is not yet law, the current write-off is legislated to 30 June 2026, so a fit-out asset missed this year simply rolls into the next under the same rules.
The bigger FY27 question is structure, not the write-off. Announced capital gains changes from 1 July 2027, and a minimum tax on discretionary trusts from 1 July 2028, are not yet law, but they matter here because going-concern and letting entities often sit in trusts. If you are choosing between freehold and leasehold, the tenure decision interacts with how the business is held, so it is worth raising the structure with your accountant early rather than at settlement.
None of this is a reason to rush. In practice, the buyers who land cleanly are the ones who fixed the tenure question first, modelled the deposit against a realistic going-concern valuation, and lined up the structure before a property appeared.
Freehold versus leasehold is not a side question in accommodation finance; it is the decision that sets the gearing, the loan term and the deposit across every lane, from motels to pubs to holiday parks. A freehold going concern gears on the whole asset, a leasehold is capped by the lease, and supporting security can close the gap either way. The FY27 window adds a timing and structure layer, with announced Budget changes to weigh with your accountant, but the order of work does not change: tenure first, valuation second, deposit third.
Key takeaway: decide freehold or leasehold first, because tenure sets the gearing, then plan the deposit against the going-concern valuation, not the asking price.Frequently Asked Questions
The difference between a freehold going concern and a leasehold is what you actually own: a freehold going concern is the land, the buildings and the operating business as one asset, while a leasehold is the business held on a lease with no real property attached. That difference drives the gearing, because a lender can take security over freehold land but not over a lease. It also sets the loan term, which on a leasehold is capped inside the remaining lease.
Freehold usually lets you borrow more than leasehold for the same accommodation business, because the lender is securing against real property as well as the trade. A freehold going concern motel or park typically gears around 60 to 70 percent of the going-concern valuation, indicative and varies by lender, while a leasehold sits lower and is capped by the lease term. Supporting security can lift either path toward the full price.
Buying the freehold changes the finance by bringing a commercial property loan into the deal, secured against the land and buildings, which a leasehold purchase does not have. On a freehold the lender sizes the loan on the going-concern valuation of the whole asset; on a leasehold there is no real property, so funding leans on the business and a shorter, lease-capped term. The freehold path gears higher but needs a larger deposit base to match.
The FY27 Budget changes the planning backdrop rather than the lending rules for an accommodation purchase. The instant asset write-off has been announced to become permanent from 1 July 2026 for smaller businesses, though that is not yet law and the current write-off is legislated only to 30 June 2026. Announced capital gains and discretionary trust changes from 1 July 2027 and 1 July 2028 are also not yet law, so treat them as timing inputs to raise with your accountant, not settled rules, and map them against your own deal on the accommodation succession finance guide.
The deposit you need to buy a freehold accommodation business is set against the going-concern valuation, not the asking price, so it is smaller than the headline figure makes it look. On a freehold going concern geared around 60 to 70 percent, indicative and varies by lender, your deposit and any supporting security cover the rest. A realistic valuation read early is what tells you the true number, so it is worth speaking to a broker before you sign.
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