Purchasing your business premises has real financial advantages. Over time you build equity in a tangible asset that may appreciate in value. You can renovate or fit out the space exactly as your business needs it, without asking a landlord for approval. You are also protected from rent increases and lease non-renewals, which gives your operations genuine long-term security.

From a tax perspective, owning commercial property may allow you to claim depreciation deductions and potentially access capital gains tax concessions when you eventually sell.

The downsides are equally real. You need a large deposit up front, plus funds for stamp duty, legal fees and ongoing maintenance. The capital tied up in property cannot be directed elsewhere in your business. And if your needs change, selling commercial property takes time and comes with cost.

Leasing requires far less capital upfront. You keep more cash free for the things that actually drive business growth, such as staff, stock, technology and marketing. If your industry depends on a prime location, leasing can put you in an area that would be completely out of reach to purchase outright.

Leasing also gives you genuine flexibility. If your business grows quickly and needs more space, or if you want to relocate to a better spot, moving from a lease is far simpler than selling a commercial property.

The main downside is that every rent payment builds equity for your landlord, not for you. You also have less control over the space, and face real uncertainty if the landlord decides to sell or significantly increase rents at renewal time.

Before you make a decision, work through these questions honestly:

If buying makes sense for your situation, getting the right finance structure is critical. Commercial property loans work differently to residential home loans. Interest rates are generally higher, maximum loan-to-value ratios are lower, and lenders will look closely at your business financials when assessing your application.

Some buyers use a self-managed super fund (SMSF) to purchase business premises, which can offer tax advantages but comes with strict compliance rules. Others combine business savings with a commercial loan. In some cases, business owners tap into existing residential property equity to fund part of the deposit. Our guide on home equity loans explains how unlocking equity works and what lenders look for.

A mortgage broker who understands both residential and commercial lending can compare options across multiple lenders and help you find a structure that fits your cashflow and long-term business goals. The team at Serres Property Finance is here to help you work through your options.