Funding Multi-Unit Freehold Buildings (MUFB): Separate Leases or Combined?

August 16, 2023
Funding Multi-Unit Freehold Buildings (MUFB): Separate Leases or All Together?

Investing in multi-unit freehold buildings (MUFB) can be an excellent opportunity for property investors. However, one crucial consideration when acquiring such properties is how to structure the leases: whether to have separate leases for each unit or combine them into a lease agreement. In this blog post, we will explore the pros and cons of both approaches and provide insights on how to effectively fund your MUFB investment.

Separate Leases for Each Unit


  • Individual control: With separate leases, you have greater control over each unit's rental terms, including setting rent prices, lease durations, and tenant selection.
  • Flexibility: If one unit becomes vacant, you can still generate rental income from the other occupied units, minimising the impact on cash flow.
  • Easier financing: Lenders may find it easier to finance individual units with separate leases, as each unit's income can be assessed independently.


  • Administrative burden: Managing multiple leases can be more time-consuming and require additional administrative efforts, such as tracking multiple rental agreements, maintenance requests, and tenant communications.
  • Potential vacancies: If multiple units become vacant simultaneously, it may lead to a significant reduction in cash flow and require additional efforts to fill the vacancies quickly.

Combined Lease Agreement


  • Streamlined management: A single lease agreement simplifies management tasks, such as rent collection, property maintenance, and tenant communication.
  • Consistent cash flow: With a combined lease, the rental income is not dependent on individual unit occupancy. Even if some units are vacant, the overall cash flow remains more stable.


  • Limited control: Combining units into a single lease means relinquishing some control over individual unit terms, such as rent adjustments and lease renewals.
  • Financing considerations: Some lenders may have stricter requirements or limitations when it comes to financing properties with combined lease agreements, as they prefer more individual unit-based assessments.

Funding Muli-Unit Freehold Building (MUFB) Investments

Funding multi-unit freehold buildings (MUFB) requires careful consideration of lease structure and funding strategies. While separate leases offer more control and flexibility, combined leases provide streamlined management and consistent cash flow.

From a Lender's perspective, both options can be funded if you present a strong business case and demonstrate your ability to manage the property effectively. Lenders will consider your financial history, the property's location, your experience as a property owner, and your overall business plan.

Assess your investment goals, property characteristics, and personal preferences to determine the most suitable lease structure for your MUFB investment. It's essential to communicate clearly with potential lenders and provide detailed financial projections, property management plans, and market analysis. If you have a clear strategy for managing risks and ensuring steady income, lenders may be more open to providing funding, regardless of whether you choose single or combined leases.

At Merryoaks, our experienced funding specialists can advise on the best funding strategies for your investment. In some complex cases, our professional industry contacts will aid us in solving the problem. Rest assured that there is a solution out there to help you and the situation you are in. We are here to help you find it and work through it.

   Speak to a Funding Specialist

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