At some stage, almost every business owner will face the decision of whether to lease or buy their business property. It’s not a simple choice and depends on various factors, including the nature and maturity of your business, the current property market, and your available capital.
We understand how important this decision is, so we’ve put together some key questions to help you weigh up the options.
1. How Stable and Well-Established is Your Business?
If your business is well-established and you feel confident predicting your property needs for the next 10 years or more, buying could be an excellent investment. Any improvements made to the property can build long-term value, and over time, you may benefit from capital growth.
However, if your business is still growing or your future space requirements are uncertain, leasing provides more flexibility. It allows you to upsize or downsize as needed without the long-term commitment of owning property. If the unexpected happens and the business needs to close, buying out a lease is generally less costly than holding an empty property or selling at a capital loss.
☝🏽 Mel’s Tip: Consider the stability of your industry too. If you’re in a fast-changing market, flexibility might outweigh ownership.
2. How Much Capital is Available?
Purchasing commercial property typically requires a significant upfront investment. Most lenders will require a deposit of at least 30% of the property’s value, plus you’ll need to budget for taxes, legal fees, and potential improvement costs.
If capital is tight, tying up funds in property might not be the best choice. However, if your business has surplus capital, commercial property can be a valuable asset—especially if you secure the right location at a good price. Owning your premises gives you control, shields you from rental increases, and ensures you won’t face the stress of being forced to relocate.
3. How Important is Location?
Location can be a critical factor, particularly for businesses that rely on customer visibility or proximity to certain areas. Leasing often provides greater access to prime locations that might otherwise be unaffordable to purchase.
For retail businesses, location is everything. A lease could allow you to establish a presence in a high-traffic or prestigious area without the substantial capital outlay of buying.
☝🏽 Mel’s Tip: For businesses that don’t rely on foot traffic or prestige locations, ownership might provide better long-term value.

4. How Will This Affect My Cash Flow?
A long-term, fixed-rate mortgage can provide stability and potentially compare favourably to leasing, especially when rent increases and lease renewals are factored in. With interest rates remaining relatively stable, your cost-to-own may even be similar to your cost-to-lease.
Additionally, many ownership costs, including mortgage interest and property-related expenses, are tax deductible. However, remember that as an owner, you’re responsible for all maintenance and improvement costs, which can add to your day-to-day expenses.
5. Do You Really Want to Be a Landlord?
One often-overlooked factor is the time and energy required to manage your own property. Ownership means you’ll take on the role of a landlord, which could divert your focus from running and growing your business. Consider whether managing maintenance, improvements, and tenant-related issues is something you’re ready to take on—or if leasing allows you to focus fully on your business.
☝🏽 Mel’s Tip: Ask yourself: Do I want to deal with leaky roofs and council permits, or would I rather spend that time growing my business?
The Final Decision
The decision to lease or buy your business property is a significant one, with both financial and operational implications. If you’re weighing your options, we encourage you to book a consultation with MJA Business Solutions. We’re here to help you assess the pros and cons, consider your unique circumstances, and make an informed decision.
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