Quick answer
A loan on vacant commercial property is a private first mortgage, or a second mortgage behind the bank, secured on a shop, office, warehouse or other commercial building that currently has no tenant. Because the decision rests on the property and the exit rather than rental income, it can refinance a nervous bank or release equity until the building is re-let and refinanced, or sold. Loans run from $20k to $5m for 1 to 24 months.
Key points
- No lease needed: the decision rests on the building and the exit, not rent
- Bridges the gap until the property is re-let and bank-refinanced, or sold
- Interest can be capitalised, so an empty building doesn't have to fund repayments
- Holding costs, GST on sale and clearance certificates are planned into the exit
- Amounts
- $20k – $5m
- Term
- 1 to 24 months
- Interest
- Can be prepaid or capitalised
- Assessment
- No formal valuation required
A commercial building can go from a reliable asset to a problem in one phone call: the tenant isn’t renewing. The rent stops, the outgoings don’t, and the bank that was happy at the last review starts asking questions. Many owners then face a choice between selling into a weak position and stretching their own cash to carry an empty building.
A private loan secured on the vacant property offers a third option: time. Time to re-let, refinance or sell on your terms.
Can you get a loan on a vacant commercial property?
Yes. A private lender can take a first mortgage over a vacant shop, office, warehouse, medical suite or other commercial building, or a second mortgage behind an existing bank loan. Unlike a bank, the decision doesn’t hinge on rent covering repayments. It rests on what the building is, where it is, how much is owed against it and how the loan will be repaid.
The essentials, briefly: loans of $20k to $5m; private first mortgages for 1 to 24 months; interest that can be capitalised or prepaid, so an empty building isn’t asked to make repayments; no formal valuation required; and, with documents ready, funding possible within 24–48 hours (or the same day for property-secured amounts of $20k to $250k).
Why do banks back away when a tenant leaves?
Commercial bank loans are usually built around the lease. A vacancy hits them in three ways:
- Servicing disappears. The rent that met the bank’s interest-cover test is gone, so the loan fails a covenant even though the owner hasn’t missed a payment.
- The bank’s view of the security changes. An empty building is often treated more conservatively than a leased one, which can push the loan over the bank’s limit.
- Review dates bite. At the next annual review or term expiry, the bank may ask for a reduction, more security or a refinance elsewhere. See bank won’t renew your facility.
None of this means the building is a bad asset. It means it’s between tenants, which is exactly the kind of temporary problem short-term private lending is designed for.
How does a private lender look at an empty building?
| What’s assessed | Why it matters for a vacant building |
|---|---|
| Location and street appeal | Drives how quickly it re-lets or sells |
| Building condition and flexibility | A general-purpose layout suits more tenants and buyers |
| Why it’s vacant | Above-market asking rent, needed works or a weak area each call for a different plan |
| Debt against it | Sets the equity cushion |
| Holding costs | Land tax, council charges, insurance and levies continue without rent |
| The exit | Re-let and refinance, sell, or move your own business in |
Which exits work for a vacant commercial property?
| Exit | How it repays the loan | What makes it credible | Typical term needed |
|---|---|---|---|
| Re-let, then bank refinance | New lease supports a bank loan | Agent appraisal of rent and demand, enquiry levels | Longer: leasing plus refinance |
| Sell with vacant possession | Sale proceeds | Owner-occupier demand in the area, agent campaign plan | Medium |
| Move your own business in | Bank refinance as owner-occupier | Trading business, accounts, fit-out plan | Medium |
| Sell to a developer or repositioner | Sale proceeds | Zoning and site potential | Varies |
| Partial lease, then refinance | Part rent supports a smaller bank loan | Signed lease on part of the building | Medium |
If the building needs works before it will lease or sell well, see fund a value-add before sale; if a sale is already underway, bridge until a property sells covers the timing.
What does it cost to hold an empty commercial building?
Vacancy is expensive even before the loan. Build these into the loan amount and the term:
| Holding cost | Notes |
|---|---|
| Land tax | In NSW, shops, offices, factories and warehouses are covered; liability is set on land held at midnight on 31 December and isn’t pro-rated |
| Victoria’s CIPT | Commercial and industrial land that entered the regime from 1 July 2024 pays an annual tax ten years after entry; unpaid CIPT is a first charge on the land |
| Council and water charges | Continue regardless of occupancy |
| Insurance | Check your insurer’s conditions for vacant buildings |
| Strata levies | For strata offices, shops and units |
| Leasing costs | Agent fees, incentives, fit-out contributions |
| Interest on the loan | Can be capitalised so nothing is paid monthly |
Unpaid land tax transfers with the property in NSW, so falling behind on it during a vacancy can complicate a later sale. The land tax bills page covers funding a large assessment.
What about GST and settlement if the exit is a sale?
- GST: The ATO says a sale of property by itself isn’t a going concern. A leased building can be sold as a going concern when the leases go with it, and a partly tenanted one only if the vacant space is being marketed for lease or refurbished. A wholly vacant building may therefore be a taxable sale for a GST-registered seller. Get your accountant to confirm before relying on the proceeds.
- Clearance certificate: Since 1 January 2025, unless an Australian resident seller provides an ATO clearance certificate, the buyer must withhold part of the price, regardless of value. Apply early.
How can you shorten the vacancy while the loan runs?
The loan buys time; what you do with the time decides the exit. Owners who re-let quickly tend to do a few things early:
- Price the space to the market, not to the last lease. An agent’s honest rent appraisal at the start saves months.
- Fix the obvious. Tired amenities, poor signage or an outdated air-conditioning system can be what keeps tenants walking past. The loan can fund modest works.
- Offer flexibility. Splitting a large floor, accepting a shorter initial term or contributing to a fit-out widens the pool of tenants.
- Target the right trades. Retailers, franchisees and service businesses each want different things from a shopfront; see retail and franchise.
- Run a dual campaign. Marketing for lease and for sale at the same time keeps both exits alive.
If the building is a warehouse or factory rather than a shop or office, industrial property loans covers the security points specific to industrial buildings, and the exit strategy glossary entry explains how lenders judge each route out.
How does it work?
- Tell us about the building in the 60-second enquiry: where it is, what’s owed, the amount, why it’s vacant and your plan. There’s no credit check at this stage.
- Test the plan. A specialist discusses the leasing or sale strategy and what the agent is seeing.
- Letter of Offer. It fixes the amount, the term, how interest is handled and the assessment fee.
- Documents signed with your solicitor; ID verified for every owner and guarantor.
- Bank repaid or funds released at settlement; the mortgage is registered.
- Re-let and refinance, or sell, and the loan is discharged.
Who suits a vacant commercial property loan?
- Investors whose tenant has left and whose bank is reducing or reviewing the loan.
- Owners who need cash for incentives or fit-out to land the next tenant. See fit-outs and new premises.
- Business owners moving into their own building after a tenant leaves.
- Owners selling with vacant possession who need funds before settlement.
When isn’t it the right move?
- When the building won’t lease or sell at any sensible price. Borrowing only adds cost. Get an honest agent’s view first.
- When the vacancy is structural, such as an obsolete building in a declining strip, and no plan addresses it.
- When selling now is clearly better. See borrow against property vs sell it.
- When the bank will wait. If your bank is comfortable through the vacancy, keep the cheaper loan.
How does a private loan compare on a vacant building?
| Private first mortgage | Second mortgage behind bank | Stay with the bank | Sell now | Big incentive to lease fast | |
|---|---|---|---|---|---|
| Needs a lease? | No | No | Usually | No | Creates one |
| Who controls timing | You, within the term | You, if the bank stays | The bank | The market | The tenant |
| Cost | Higher than a bank | Higher than a first mortgage | Lowest | Agent and sale costs | Lower effective rent |
| Main risk | Exit takes too long | Bank reviews anyway | Forced reduction | Selling cheaply | A weaker lease |
Documents you’ll need
- ID for every owner and guarantor; ABN or ACN; any trust deed.
- The property address, and strata details if it’s in a scheme.
- Statements for loans secured on it, including any bank review letter.
- The former lease and the agent’s leasing or sale appraisal.
- Your plan for the exit, in writing.
How fast is it, and what does it cost?
With documents ready, funds can move within 24–48 hours for up to $5m. Price reflects risk: a vacant building with a credible leasing plan in a strong location is priced on its security, LVR, term and exit, with the aim of the sharpest outcome the deal allows. The components are interest (prepaid or capitalised), a small assessment fee that varies by loan and is shown on the Letter of Offer, legal and registration costs, and discharge when the loan is repaid. A second mortgage generally costs more than a first.
Illustrative example (net funds): an Adelaide owner’s two-level office building, worth about $2.2m, loses its tenant. The bank, owed $950k, asks for a reduction to $700k within 60 days. Illustrative: a private first mortgage at 55% of value would allow up to $1.21m.
- Loan: $1.2m private first mortgage for 18 months
- Less bank payout: $950k
- Interest capitalised (allowance set on the Letter of Offer), so nothing deducted at settlement
- Less assessment fee, legal and registration costs: say $18k
- Funds released: about $232k for a tenant fit-out contribution, leasing fees and 18 months of land tax and outgoings
- Exit: a bank refinance once a new lease is signed, or a sale with vacant possession as the fallback Local title and tax points are on the Adelaide private lender page.
Empty building, impatient bank? Start a 60-second enquiry.
Building empty? See if you qualify
Send the address, what’s owed against it, how much you need and your plan to re-let or sell. You won’t face a credit check to enquire, your details stay with one lender rather than being circulated, and a specialist reads every enquiry and calls back with a clear answer about whether the plan works.
Honest detail about the vacancy and the existing debt lets us answer properly the first time. See if you qualify, or compare structures on the private first mortgage page.
Frequently asked questions
Our tenant of eight years left in June and the bank wants to reduce our loan at review. Can a private lender take the bank out?
Yes, that's a common use. A private first mortgage can repay the bank and give you 1 to 24 months to re-lease the building and then refinance back to a bank on the strength of the new lease. The lender will want to see the leasing plan and the agent's view on demand.
Can I borrow against an empty shop to fund the fit-out a new tenant wants?
You can, and it's often the fastest way to secure a tenant who needs works done. The loan funds the incentive or fit-out contribution, and the signed lease then supports a bank refinance. Get the lease terms in writing before you spend the money.
My office building has been vacant for over a year. Is that too long?
Not automatically, but the lender will want to understand why. If the asking rent is above the market or the building needs work, the plan needs to address that. A long vacancy makes a sale exit more likely than a lease-and-refinance exit.
I want to move my own business into our vacant warehouse. Does that change the loan?
It can strengthen it. An owner-occupier with a trading business behind the property has a different exit, often a bank refinance once the business is in place. Tell the specialist, because the purpose and the exit both change.
Do I need to make monthly payments while the building earns nothing?
Not necessarily. Interest can be capitalised and paid when the loan is repaid, or prepaid from the loan at settlement. That's often why owners of vacant buildings use a private loan instead of stretching their own cash.
Can I sell my vacant building as a going concern to avoid GST?
Generally not. The ATO says a sale of property by itself isn't a going concern; for a leased building, the leases must go with it, and for a partly tenanted building the vacant space must be being marketed for lease or refurbished. Ask your accountant how GST applies before you rely on sale proceeds as the exit.
How much can I borrow against a vacant commercial property?
It depends on the building, its location, what's owed on it and the exit. Vacant buildings are assessed carefully because there's no rent behind them, so the equity cushion matters. The equity calculator gives a rough idea before you enquire.
The bank says the property is worth less now it's empty. Do you rely on that figure?
No. There's no formal valuation required here; the lender assesses the building itself. A lender's own view will still reflect the vacancy, but it isn't tied to a bank's figure.
Our Adelaide strip shop has been empty for three months and land tax is due. Can a loan cover holding costs too?
Yes, a loan can fund holding costs such as land tax, council charges and insurance while you find a tenant, as long as the exit covers the full amount. Build those costs into the loan rather than finding them month by month.
What if a new tenant doesn't sign before the loan term ends?
Raise it with the lender well before the due date. Depending on equity and progress, an extension may be possible, or the exit may switch to a sale. Setting the term with a realistic leasing timeline avoids most of this.
Can a vacant commercial property secure a second mortgage behind my bank?
Yes, if the bank is staying and there's equity behind its loan. If the bank is reviewing the facility because of the vacancy, refinancing it with a private first mortgage is often the cleaner move.
Is a vacant building in a country town acceptable?
Case by case. The lender looks at how readily the building could be leased or sold in that market. Strong main-street locations in regional centres are viewed differently from buildings in towns with high vacancy.
I'm planning to sell the building with vacant possession. What should I sort out first?
Your ATO clearance certificate. Since 1 January 2025, a buyer must withhold part of the price unless an Australian resident seller provides one, whatever the value. Applying early keeps your sale proceeds, and your loan payout, intact.
Sources
- Revenue NSW — What is land tax? (updated June 2026)
- State Revenue Office Victoria — Commercial and industrial property tax effective 1 July 2024 (updated December 2025)
- ATO — Australian residents and clearance certificates (updated October 2026)
- ATO — Selling a going concern (GST and commercial property)