Leasehold Going Concern

Whereby a person owns the buildings and business but another person owns the land and leases it to them.

The leasehold going concern scenario is fairly rare but is usually found where a Council, Church group, Maori tribe or other passive investor owns land and is not interested in developing it or operating a business on it. It would have been sold to someone with a long term lease (some in perpetuity) and the purchaser developed buildings on the land in order to operate the business. That person usually pays the land owner a rental every year and the ground rent will be reviewed periodically - some 2 yearly stretching out in some cases to 21 yearly.

In any event, it is like owning a freehold going concern but you don’t own the land. Some people argue that the ground rent is the same as having a mortgage and often the return rates are lower than what the banks will charge so it can be a very good deal. You will need to make your own enquiries and decisions on the issue but invariably the capital outlay required is lower and it may allow you to buy a much bigger business than a Freehold Going Concern.

Click here to go to our Leasehold Going Concerns for sale