My PropCo OpCo strategy
Several Property118 readers have requested details of how I manage my properties, and now, most importantly, how I protect my properties from liabilities and potential fines of up to £40,000.
My Property Company (PropCo) owns some 70 properties, purchased over the last 30 years, the shares for which shares are all owned by family members. Apart from receiving rent once a month and a few outgoing transactions such as accountants fees and paying HMRC, this company does very little.
I also have an operations and management company (OpCo) which is entirely responsible for the business of lettings, management and maintenance. It is much more than a letting agent or a managing agent.
OpCo rents all the properties from PropCo, and many more from other owners, a total approaching 100. OpCo is the landlord, because it has a monthly rolling headlease contract with permission to sublet. PropertyCo is merely a passive property ownership company.
Contracts, deposit protection, court proceedings, maintenance, adhering to the law of the land (including the RRA), possession and most importanty any fines, court judgements and civil penalties are all the responsibility of OpCo.
OpCo does not own any property, so in the event of a large fine or court judgement against the company, the maximim level of exposure is the money in the bank account. It cannot lose the property, for it does not own property.
Corporation tax is levied on both PropCo and OpCo. This is not a way to reduce tax, it is a means of separating risk associated with the business of letting, maintenance and management, away from ownership.
EDITORS NOTE
This structure can work well where the PropCo and the OpCo are both limited companies. It does not usually work when the ownership of the property is not a corporate entity, because that is generally regarded as a tax-play under the Transfer of Income Streams legislation.
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Member Since January 2011 - Comments: 12212 - Articles: 1408
1:19 PM, 20th February 2026, About 2 months ago
This is a well-established commercial structure and certainly not something unusual or niche.
Separating ownership from operations through a PropCo and OpCo model has been used for decades across asset-heavy sectors where there is a clear distinction between long-term capital ownership and day-to-day regulated activity.
In hospitality, for example, groups such as InterContinental Hotels Group and Marriott International commonly operate hotels they do not own. One entity holds the real estate. Another carries staffing, compliance, guest liability and operational risk.
The same principle has historically been seen in retail groups including Tesco and Sainsbury’s, where property ownership and retail trading have often been structured separately because the risk profiles are fundamentally different.
This is orthodox corporate governance. It aligns liability with activity. It ring-fences long-term capital from operational volatility. It is not about tax reduction, particularly where both entities pay corporation tax. It is about sensible risk management.
Given the increasing regulatory and financial penalties facing landlords, separating ownership from operational exposure is arguably prudent commercial discipline rather than something to be viewed with suspicion.
It is a structure widely recognised in mainstream business. Property is no different.
Member Since July 2013 - Comments: 2002 - Articles: 21
2:53 PM, 20th February 2026, About 2 months ago
@The_Maluka “OpCo does not own any property, so in the event of a large fine or court judgement against the company, the maximum level of exposure is the money in the bank account. It cannot lose the property, for it does not own property.”
True, insofar as it goes. However, s104 of the Renters’ Rights Act 2025 includes provisions to pierce the corporate veil and make directors, and in some cases shareholders who manage the company, liable for breaches by the company.
Member Since February 2022 - Comments: 206
7:11 PM, 22nd February 2026, About 2 months ago
Reply to the comment left by Ian Narbeth at 20/02/2026 – 14:53
Agreed not just the 2025 RRA but also the Building Safety Act 2022 breaks down this structure.
Member Since July 2015 - Comments: 66
11:55 AM, 23rd February 2026, About 2 months ago
Reply to the comment left by Ian Narbeth at 20/02/2026 – 14:53
It can help the situation if the Persons with Significant Control of PropCo is not a Director of the OpCo. With different Directors its harder to claim the construct that control is all invested in one individual or group.
Member Since October 2022 - Comments: 410
2:28 PM, 23rd February 2026, About 2 months ago
I may be quite incorrect but isn’t this structure the basis of freehold owning RMCs Resident Management Coys with no interest in the land embedded in the individual leaseholders titles.
Leaseholders hold 2 roles
1. As joint legal owners of the freehold ( as share of freeholders) with £1 paid up share in the RMCs with obligations under M&A and Co-act 2006 and
2. As beneficial owners of their flat held as tenants in common and the RMC act obh of the Landlord/Lessor with obligations under LTA CLRA etc and under separate covenant acts obh of the Lessee who has obligations in their own tripartite lease to the Lessor/LL and rights under LTA CLRA etc
The leases hold the value and the contribution by each leaseholder is stated in the deed of trust . The separate FH has no value.
Member Since May 2017 - Comments: 765
11:50 AM, 24th February 2026, About 2 months ago
Which area do you operate in? I have an hmo in bournemouth. Would you like to buy it?
Member Since May 2015 - Comments: 2203 - Articles: 2
4:49 PM, 24th February 2026, About 2 months ago
Reply to the comment left by JB at 24/02/2026 – 11:50
No sorry I do not let any HMO’s, I have seen too many colleagues suffer from HMO tenants.