Leasehold Business Finance

Leasehold business finance at a glance

Leasehold business finance is lending secured on, or arranged around, a commercial lease rather than a freehold. It is used to buy a leasehold business (the lease, goodwill, fixtures and stock together), to fund a lease premium or assignment, to refit or extend leasehold premises, or to release working capital from a trading business that occupies leased premises. Because the lender’s security is a lease that expires, the underwriting is different from a conventional commercial mortgage: the length of the lease, the terms of the lease itself and the trading performance of the business matter as much as the property.

Figures reviewed 23 August 2026 and refreshed monthly. They describe the market as we see it across our lender panel; your terms depend on the lease, the business and your own position.

How leasehold business loans work

A lender advancing money against a leasehold interest is lending against two things: the value of the lease as a saleable asset, and the ability of the business trading from the premises to service the debt. On a strong lease in a prime location — a long, assignable lease at a market rent in central London, for example — the lease itself can carry most of the loan. Outside the central London ring, or on shorter leases, our funders will usually look for additional security: a charge over the borrower’s home or another property, a personal or cross-company guarantee, or a debenture over the trading company.

The lease is read closely. Lenders check the unexpired term, whether the lease is inside or outside the security-of-tenure provisions of Part II of the Landlord and Tenant Act 1954, the rent review pattern, the alienation clause (whether and how the lease can be assigned or charged), break clauses, repairing obligations and any restrictions on use. A lease that cannot be charged without landlord consent, or that has a break in the landlord’s favour within the loan term, will limit what can be borrowed. We review the lease before an application goes to a lender so that these points are dealt with, not discovered at the legal stage.

Buying a leasehold business: what “leasehold” means and what lenders look at

When a business is advertised as leasehold, you are buying the right to occupy the premises under the existing lease for its remaining term, together with the goodwill, fixtures, fittings and (usually) stock. You are not buying the building. The price is therefore a going-concern price, and the lender’s valuer will value the business as a trading entity, not the bricks and mortar. This is the single most common point of confusion for first-time buyers of shops, cafés, restaurants, salons and guest houses.

The process runs in this order. First, the seller’s accounts (ideally three years) and current management figures are reviewed, because the loan is serviced from that trade. Second, the lease is examined for the points above, and the landlord’s consent to assign is sought — landlords can take weeks to respond, so we start this early. Third, the lender instructs a specialist valuer to produce a going-concern valuation; it is here that many applications stall, because the valuer’s figure comes in below the agreed price. Fourth, the lender issues a formal offer, conditional on the licence to assign, satisfactory legal reports and any additional security being perfected. Fifth, completion of the business purchase and the loan happen simultaneously through the solicitors.

Practical points we raise with every buyer: check that the lease has enough term left to support the loan and a future resale (a lease with under ten years unexpired is hard to finance and harder to sell); confirm whether the lease is protected under the 1954 Act, because an unprotected lease has no automatic right of renewal; budget for the landlord’s legal costs on assignment and for any rent deposit; and obtain the seller’s VAT, PAYE and rates position, since arrears can follow the premises.

Worked example

A buyer agrees to purchase a café in Rainham for £180,000 as a going concern. The lease has 14 years unexpired, is inside the 1954 Act, and the rent is £24,000 a year with a review in year 5. Adjusted net profit in the last full year was £62,000. The buyer has £70,000 available. A specialist funder on our panel offers £110,000 over 10 years, secured on the lease with a personal guarantee and a second charge over the buyer’s home, with an arrangement fee of 1.5%. Annual debt service of roughly £16,000–£18,000 leaves the business with comfortable headroom against the £62,000 profit, and the lender’s minimum debt-service cover is met with margin. Had the lease carried only 7 years, the same lender would have capped the term at 5 years and reduced the advance; had the buyer owned no other property, the advance would likely have been limited to around 50% of the going-concern value.

What our lenders require

• Two to three years’ accounts for the business being bought or refinanced, and up-to-date management accounts
• A business plan and cash-flow forecast where the buyer is new to the trade or the premises are being repurposed
• Evidence of the buyer’s own contribution and its source
• The lease, any deeds of variation, and the landlord’s position on assignment or charging
• Relevant experience or a credible management arrangement for licensed and regulated trades (pubs, care homes, nurseries, hotels)
• A clean or explainable credit history; adverse credit is not a bar with the right funder but it affects pricing
• Additional security where the lease alone does not support the loan, particularly outside central London

Where applications fail, and how we avoid it

In our experience the two recurring failure points are the valuation and the lease. Going-concern valuations undershoot agreed prices when the accounts do not support the multiple the seller is asking, or when the valuer discounts a short or restrictive lease. We address this before the lender is approached: we test the price against the accounts, we identify lease defects and, where possible, negotiate a lease extension or variation with the landlord as part of the purchase. Applications also fall over when the landlord delays or refuses consent to assign; a lease that requires consent “not to be unreasonably withheld” gives the buyer statutory protection under the Landlord and Tenant Act 1988, and we make sure the request is made properly and early.

How Giles Finance arranges leasehold business finance

Giles Finance is a whole-of-market broker authorised and regulated by the Financial Conduct Authority (firm reference 726857), with offices in Dagenham, Rainham, Putney and Willenhall. We arrange leasehold business loans through a selected panel of specialist funders, and we combine them where it helps — a leasehold loan for the purchase alongside asset finance for equipment, invoice factoring for working capital, or a secured loan against other property to reduce the rate. Where the freehold is also available, we will compare a commercial mortgage on the whole, and where speed is the issue, bridging finance can complete the purchase while the term loan is arranged. Call 020 8088 2211 or use our finance calculators to see what the repayments look like before you talk to us.

Where we advise: we arrange leasehold business finance for clients across England and Wales, working from our offices in Putney, Dagenham, Willenhall and Rainham. See areas we cover for the postcodes each office serves.

Leasehold business finance: frequently asked questions

What is leasehold when buying a business?

It means you are buying the business and the right to occupy its premises under the existing lease for the remaining term, not the building itself. The price reflects goodwill, fixtures, fittings and the lease; the freehold stays with the landlord, to whom you will pay rent.

Can I get a mortgage to buy a leasehold business?

Not a mortgage in the residential sense, but yes — a leasehold business loan secured on the lease and the trading business, often supported by a personal guarantee or a charge over other property. Lenders typically advance up to 60–70% of the going-concern value on a strong lease.

How long does the lease need to be?

Most funders want the lease to outlast the loan by a margin, so a 10-year loan usually needs 15 or more years unexpired. Leases with under 10 years remaining are difficult to finance and limit resale; we often negotiate an extension with the landlord as part of the purchase.

What deposit do I need to buy a leasehold business?

Plan on 30–40% of the going-concern price from your own resources. A larger contribution, or additional security such as a charge over your home, improves both the rate and the chance of approval.

Does the landlord have to agree to my loan?

Usually the landlord must consent to the assignment of the lease to you, and some leases also require consent to charge the lease. Where the lease says consent is not to be unreasonably withheld, the Landlord and Tenant Act 1988 obliges the landlord to respond within a reasonable time and to give reasons for any refusal.

What interest rate will I pay on a leasehold business loan?

Rates are set individually and in 2026 typically sit in the high single digits to low double digits per annum for lending secured on the lease alone, falling where freehold property is added as security. The lease quality, the trade, your experience and your credit profile all move the price.

Why do leasehold business loan applications get declined?

The two most common reasons are a going-concern valuation below the agreed price and a defective or short lease. Both are usually avoidable if the accounts and the lease are reviewed before the application is made, which is how we work.

Is leasehold business finance regulated by the FCA?

Lending to a limited company or for a wholly commercial purpose is generally unregulated. Giles Finance is nevertheless FCA authorised (firm reference 726857) and applies the same standards of advice to every commercial case.

Page last reviewed 23 August 2026.