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Freehold vs leasehold service stations

The differences between buying a leasehold servo business, a freehold going concern and a fuel-leased investment property.

Leasehold

You buy the business only. The entry price is lower and your capital goes into goodwill, equipment and stock. Your security is the lease, so the years remaining, options and rent reviews are critical. Lenders usually want a bigger deposit for leasehold businesses because goodwill is the main security.

Freehold going concern

You buy the land, buildings and business together. You control the site, can benefit from land value growth, and avoid rent. In return you need more capital and take on the site's environmental history. It's usually valued as two parts: the property and the business.

Freehold investment

You buy the property with a fuel operator already paying rent. Value depends on the net income, the tenant's strength, the remaining lease term (WALE) and the yield buyers expect. Fuel-leased investments with national tenants and long leases are popular with private investors and syndicates.

Tax and duty

Stamp duty, GST and capital gains tax treatment differ between these structures and between states. A business sale can sometimes be GST-free as the supply of a going concern if the conditions are met. Get advice from your accountant before you sign.

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General information only, not legal, tax or financial advice. Get advice for your situation before buying or selling.