What a Lender Advances on a Big Freehold Holiday Park
Large Freehold Holiday Park Finance | Switchboard Finance
Accommodation Finance
Freehold Going Concern · Valuation · Gearing
What a Lender Advances on a Big Freehold Holiday Park
Buying a large freehold holiday park is a going concern purchase, and the loan is built on what the park earns, not on the sticker price. Here is how a lender sizes it, what deposit it takes, and what bridges the gap.
Quick Answer
On a large freehold holiday park, a lender sizes the loan against the going concern valuation, not the asking price. A freehold park gears higher than a leasehold because you hold the land underneath the business, and equity you already own can bridge the deposit gap.
How a lender sizes a big freehold park loan
The asking price is not the number a lender sizes a big freehold holiday park against; the going-concern valuation is. A freehold park is bought and financed as a freehold going concern, which bundles the land and the trading business into one asset, so the lender funds the whole operating thing rather than the real estate on its own. The starting point is what the park earns, not what the vendor wants for it.
Because the security is a business sold as a going concern, two parks with identical gross takings can support very different loans. The figure a credit team sizes the deal against is the adjusted net profit, the real earnings once the owner's add-backs are put back in, and a park that presents its income cleanly will out-borrow one that does not, even at the same turnover.
The going-concern valuation, not the asking price
The going-concern valuation, not the asking price, is what decides the loan, and you can run the formula yourself before you sign. The going-concern value is adjusted net profit times a yield multiple (illustrative), where the multiple reflects location, condition, occupancy and the income mix of the park.
Start with the adjusted net profit, apply the yield multiple a valuer would use for a park of that quality, and you have the number the lender will lend against. If it lands under the contract price, that gap is yours to find on top of the deposit, which is exactly why I pressure-test the income with a buyer before a park ever goes to a lender. The same financial due diligence a government guide to buying a business puts you through, three to five years of returns, BAS and profit and loss, is what underpins that valuation, and our explainer on what going concern means when you buy a business walks through how it flows into finance.
Your deposit, how a park gears, and supporting security
On a freehold park you are typically looking at around a 30% deposit on a freehold park (indicative, varies by lender), and it gears higher than a leasehold because the lender holds the land as well as the trade. A leasehold is secured on the lease alone, so it gears lower and asks for more cash in, while a freehold carries the land value and the capital growth that comes with it.
You do not always have to find that whole deposit in cash. Equity in other property you own can sit behind the deal as supporting security, and that supporting security bridges the deposit gap, lifting effective gearing toward the full purchase price without pushing the loan to value ratio or serviceability past where a lender is comfortable. On the bigger parks that clear cleanly, that supporting security is usually doing the heavy lifting.
Parks are specialist security, and a major bank is rarely the lender that writes them, so it helps to know the wider market has moved toward the non-bank and specialist funders who do.
Where a big freehold park deal gets stronger, and where it gets tricky
A few things decide whether a large freehold park reads as a strong deal or a tricky one, and most of them sit in the income, not the postcard.
Stronger fit
- Strong adjusted net profit with clean, accountant-supported financials
- A solid base of permanent and annual sites under the tourist income
- Freehold title with a healthy occupancy history
- Equity in other property available as supporting security
Gets tricky
- Income presented loosely, with add-backs that cannot be evidenced
- Heavy seasonality and a thin or undisclosed off-season
- A tourist-only site mix with no permanent base underneath
- A valuation that lands under the contract price
One of the things a lender weighs most is the permanent versus tourist site mix. A base of permanent and annual sites gives steady, year-round income a lender can lean on, while a heavily tourist and seasonal park earns in peaks and troughs that have to be read across the whole year rather than at the top of summer. Present that seasonality honestly, with the off-season shown, and a credit team can get comfortable; gloss over it and the valuation comes in cautious.
Who actually lends on a big freehold park
The lender that writes a big freehold park is rarely the major bank you already deal with. A park is specialist security, blended land and trade, and most of the appetite for it sits with the non-bank and specialist funders who read going-concern income for a living. That is the wider shift behind the market: a large and growing share of business owners now fund through a non-bank rather than a major, because the majors run a standard servicing calculator and tend to stop at the land.
For a park that means the deal gets matched to the lender, not the other way around. A funder that understands the permanent versus tourist mix, the tenure and the off-season will size the going concern properly, where a generalist lender reads the same file as too hard and prices it heavily or passes. Getting in front of the right lender early, with the income presented cleanly, is most of what a broker does on a park purchase, and it is usually the difference between a deal that clears and one that stalls on a valuation nobody set up to succeed.
A big freehold holiday park is financed as a going concern, so the going-concern valuation sets the loan, the income read sets the valuation, and the deposit plus supporting security decide whether you can reach the price. Get the financials presented properly, know that a freehold gears higher than a leasehold, and line up supporting security early, and a park that looks out of reach on cash often is not.
Key takeaway: size a park on the going-concern valuation, not the asking price, and line up supporting security before you sign.Frequently Asked Questions
On a freehold caravan park, lenders typically look for around a 30% deposit (indicative, varies by lender), because a park is specialist security assessed on full financials rather than a standard residential loan, so the loan to value ratio is more conservative. Equity in other property you own can be used as supporting security to bridge that gap, which can lift effective gearing toward the full purchase price. The exact figure depends on the park, the income and the tenure, so treat it as a range rather than a fixed offer.
Lenders value a holiday park on the going concern, not the bricks, by taking the adjusted net profit and applying a yield multiple that reflects location, condition, occupancy and the income mix. Two parks with the same gross takings can value very differently, and the going-concern valuation, not the asking price, is what the loan is sized against. You can see how the going concern framing works in our explainer on what going concern means when you buy a business.
A freehold park gears higher than a leasehold because the lender holds the land as well as the trading business, so there is more security behind the loan. A leasehold is secured on the lease alone, which gears lower and usually asks for more cash in, while a freehold carries the land value and the capital growth that comes with it. The trade-off runs the other way on entry cost and yield, so the right tenure depends on what you are optimising for.
Equity in other property you own can be used as supporting security on a caravan park, which bridges the deposit gap and can lift effective gearing toward the full purchase price without overstretching serviceability or pushing the loan to value ratio too high. This is often what gets a larger freehold park deal across the line when the cash deposit alone would fall short. It needs to be structured carefully against your overall position, which is where a broker earns their keep on a park purchase.
A caravan park loan is sized on the going-concern valuation, not the purchase price, so if the valuation lands under the contract the shortfall is yours to cover on top of the deposit. That is why the income needs to be presented properly before a park goes to a lender, because the valuation is built on the adjusted net profit rather than on the sticker price. It is worth pressure-testing the numbers early, the same way our explainer on going concern walks through it.
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