Commercial Finance
Do You Need a Lease for Commercial Property Finance?
5 min read- Finance Guide
- Updated 2026
Quick answer
Lease depends on property use
0% 100%
Owner occupied to fully leased
- Owner occupied property Lease often not required
- Commercial investment Lease usually important
- Vacant property Case by case
- Strong lease profile Improves approval
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Commercial property finance is usually assessed using two main factors
The loan to value ratio (LVR)
The LVR determines the maximum loan as a percentage of the property's value. Most lenders set a ceiling on this ratio based on property type and risk.
PROPERTY-BASED LIMIT
The borrower's ability to repay the loan
Lenders assess the borrower's financial strength — including income, cash flow, trading history, existing debts, and where relevant the lease income — to confirm the loan can be serviced.
Income-based limitLease importance — by property type
Lenders place different weight on a lease depending on how the property will be used
-
Owner occupied commercial — Offices, retail, industrial Often not required
-
Commercial investment — Retail / office investment Usually required
-
Vacant or specialised property — Hotels, service stations, medical Case by case
For example, if a business is buying a property to operate from itself, a lender may assess the loan based on the business's financial position rather than requiring a lease. If the property is an investment, a signed lease often helps demonstrate serviceable income.
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Owner Occupied Commercial Property
If the borrower will occupy the property, lenders usually focus on the business or borrower's own strength. They typically review:
Business financial
statements- Profit and loss
history
- Cash flow and income
stability
- Tax returns
- Existing debts
A lease may not be required where the property will be used directly by the borrower.
Investment Property Lease Strength
If the property will be leased, lenders usually consider the lease and rental income. Important factors include:
Lease
length- Tenant
strength
- Rental income
compared to loan repayments
Properties with strong tenants and long leases are generally easier to finance
Common Lease Scenarios
Commercial finance scenarios can vary depending on whether a lease is in place.
Typical situations include:
Owner Occupied
No lease needed
Borrower operates from the property
Investment Property
Lease usually preferred
Rental income supports the loan
Vacant Property
More lender scrutiny
Assessment depends on the overall deal
Each lender has different requirements regarding leases and income evidence
Common problems borrowers face
Many Borrowers struggle with commercial property finance because lease position and income evidence can affect how lenders assess the deal
No Lease In Place
If the property is an investment and there is no lease, lenders may be more cautious about the income position
Possible solutions include:
-
Securing a
tenant before settlement
-
Using stronger
external income support
-
Choosing a
lender comfortable with vacant property
Short Lease Terms
A short remaining lease term can reduce lender comfort around future rental income
Some lenders prefer stronger lease terms or longer lease duration
Alternative lenders may still consider shorter leases depending on the overall strength of the deal
Low Rental Coverage
If the rental income from the property does not sufficiently cover loan repayments, lenders may reduce the loan amount
Improving the lease structure or tenant profile may help
Applying With The Wrong Lender
Different lenders have very different policies for owner occupied, leased, and vacant commercial property
Using lenders experienced in business property finance can improve approval chances.
Steps to get Commercial Property Finance
Step
01
Determine whether the property will be owner occupied or held as an investment.
Step
02
Confirm whether a lease exists or whether one will be required by the lender
Step
03
Prepare business financial documents, lease documents, and tax returns
Step
04
Confirm expected rental income or business use of the property
Step
05
Submit the application to commercial lenders
Step
06
Once approved, the loan settles and the property purchase proceeds
Speak with a Commercial Finance Specialist
Commercial property finance can vary significantly depending on the property type, lease position, borrower strength, and whether the property will be owner occupied or leased.
A specialist can review your scenario and help determine which lenders may be able to fund it.
Speak with a finance specialist about your commercial property scenario.
Submit the short form below and a commercial finance specialist will review your situation and discuss possible funding options.
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