When looking to buy a Caravan Park, you will come across the terms “Leasehold” and “Freehold Going Concern”. This article looks at the difference between a Leasehold and Freehold Going Concern.
A leasehold is also termed as “buying the business”, without the land and buildings.
With a leasehold you are buying:
- A lease which gives you the right to occupy land and the use of the buildings on that land;
- The plant and equipment, fixtures and fittings that are required to operate the business; and
- The goodwill of the business
When you are looking at buying a caravan park leasehold, you are buying the business, with plant and equipment, fixtures and fittings and goodwill to operate the caravan park and taking over a lease with the right to occupy and operate the caravan park on that land.
Most ﬁrst time buyers acquire a Leasehold Business only as cost and ﬁnance requirements are obviously less, and it gives you a chance to determine if you like the industry before you consider the extra cost of acquiring freehold.
A Freehold Going Concern is the freehold property (including buildings) and the business operating on that property. The same party would own the land and buildings and operate the business.
With a Freehold Going Concern, you are buying:
- The freehold land and buildings
- The business – which would include plant and equipment, fixtures and fittings and goodwill (which usually includes phone numbers, customer lists, IP, etc)
A Freehold Going Concern is usually much more expensive than a Leasehold Business and such a purchase is typically by more experienced operators on their second or third Caravan Park venture. A freehold purchase will also attract stamp duty, so you really need to understand what you are buying, how much it will cost and the level of finance you require (and if you will be likely to obtain).
For more information on buying a caravan park, download our free, eBook here.