Buying Commercial Property in Victoria : Important Considerations For Commercial Investors
Buying commercial property in Victoria presents strong opportunities for income and capital growth, but it also comes with a unique set of considerations, especially around financing, tax, and compliance. Whether you’re an investor or a business owner, understanding the process and associated costs is essential before making a purchase.
This article provides general information only and does not constitute legal, financial, or tax advice. Always consult your accountant, solicitor or financial advisor for guidance specific to your situation.
Understand the Commercial Property Market
There are many types of commercial property for sale in Victoria—ranging from warehouses and factories to offices and retail assets. Demand and values are influenced by tenant quality, location, zoning, and infrastructure access.
Professional organisations like the Real Estate Institute of Victoria (REIV) offer data insights, median yields, and current vacancy trends. Engaging an REIV member agent can provide confidence that you’re working with a professional who understands the local legislative framework.
Financing: Getting a Commercial Property Loan
A commercial property loan works differently from a residential mortgage. Loan-to-value ratios are generally lower (often capped at 70%), and lenders usually require more detailed financial analysis, including lease terms, tenant risk, and property use.
Factors lenders will assess include:
Your business or investment history
Lease agreements (length and security of tenure)
Zoning and permitted uses
Your capacity to service the loan under stress scenarios
Engaging a finance broker who specialises in commercial lending can improve your chances of securing a competitive rate and favourable terms.
Tax Considerations: Stamp Duty and GST
Two major tax-related costs to factor into your budget are stamp duty on commercial property and GST on commercial property.
Stamp Duty
In Victoria, stamp duty on commercial property is payable by the purchaser. Rates are calculated on the dutiable value of the property, with no concessions available for first-time commercial buyers. It’s a significant upfront cost that can impact cash flow and borrowing capacity.
GST
If the vendor is registered for GST, the sale may be subject to GST on commercial property—usually 10%. However, if the property is sold as a going concern (e.g. tenanted and income-producing), the transaction may be GST-free, provided all ATO conditions are met.
Always seek professional tax advice before signing a contract, as incorrectly applying GST can have serious financial implications.
The Role of the REIV and Due Diligence
The Real Estate Institute of Victoria (REIV) sets industry standards and provides guidance for agents and consumers. When buying commercial property, always ensure your agent is REIV-accredited and understands legislative requirements including:
Zoning compliance
Environmental overlays
Essential safety measures
Planning permits
Due diligence should also include reviewing tenant covenants, lease schedules, outgoings, and any building defects or maintenance obligations.
Want tailored guidance on finding the right commercial property for sale in Melbourne, Victoria? Speak to CPN Commercial Group for expert local insight and proven results.
