If you have run a successful business for any length of time, you know the feeling. Every month, you write a substantial cheque for rent. That money leaves your trading business and disappears into someone else's bank account. You are the one maintaining the building, providing the economic activity that makes the location valuable, and sustaining the landlord's lifestyle.
It starts as a minor annoyance. Over five or ten years, it turns into a genuine problem when you realise you have paid hundreds of thousands of pounds to build an asset for a third party. If you ever sell your business or retire, you walk away with the value of the trade, but you are still a tenant. You have missed out on a decade of capital growth and equity.
There is a better way to structure your future. By using an OpCo PropCo structure, you can buy the office, warehouse, surgery or workshop you operate from. You effectively become your own landlord. We do not just look at mortgages; we look at the intersection of business cash flow and property ownership.
What is an OpCo PropCo structure?
The terms might sound like jargon, but the concept is straightforward. It is a method of separating your day-to-day trading activities from your high-value property assets.
OpCo (operating company): your current trading business. It employs your staff, serves your customers and generates your revenue. It does not own the building; it just uses it.
PropCo (property company): a separate legal entity, usually a limited company, set up specifically to hold the commercial property. Both companies are typically owned by the same directors or shareholders, but they are legally distinct.
In this model, the PropCo purchases the premises using a commercial owner-occupied mortgage. The OpCo signs a formal lease with the PropCo and pays a market rent. This separation is the foundation of a sophisticated wealth-building strategy.
Why business owners use this structure
Moving to an OpCo PropCo model is not just about pride of ownership. It is a calculated move that provides three major benefits: tax efficiency, asset protection and long-term wealth.
Tax efficiency and profit extraction
Rental income paid by your OpCo to your PropCo is a deductible business expense for the trading business. This reduces the corporation tax liability of your OpCo. Meanwhile, the PropCo receives that rent and uses it to service the commercial mortgage. This can be a more tax-efficient way to move money between entities and eventually extract profits than taking salary or dividends alone.
Asset protection and risk management
If your trading business faces a sudden downturn or a legal claim, creditors can usually go after the assets held within that company. If the property sits inside the OpCo, it is at risk. By holding the property in a separate PropCo, you create a firebreak. The building stays safe even if the trading business hits a rough patch.
Retirement and exit planning
When the time comes to sell your business, an OpCo PropCo structure gives you options. You can sell the trading company but keep the property. The new owner of the business continues to pay rent, providing you with a guaranteed income stream throughout retirement that is independent of the business sale price.
A worked illustration
The tenant scenario: you pay £3,000 per month in rent to an external landlord. Over 10 years that is £360,000. You have zero equity, and your rent likely increases every few years.
The OpCo PropCo scenario: your PropCo purchases the building for £450,000. With current commercial mortgage rates for owner-occupiers in the 6.5% to 7.5% range, a 75% LTV mortgage might result in a monthly payment of roughly £2,400. Your OpCo continues to pay a market rent of £3,200, but now it pays it to your PropCo. The PropCo receives £3,200, pays the £2,400 mortgage, and retains an £800 monthly surplus. After 10 years, you have paid down a meaningful portion of the debt and benefited from any capital appreciation.
The rent remains fully tax-deductible for your trading business. The difference is that you are now building your own balance sheet instead of someone else's.
How to finance your commercial premises
Securing the right owner-occupied commercial finance requires a broker who understands how to present your business to a lender. Lenders do not just look at the building; they look at the covenant strength of your trading business.
Commercial mortgages via the PropCo
This is the most common route. The PropCo is the borrower, but the lender will look at the OpCo's accounts (usually two to three years) to ensure the business is profitable enough to sustain the rent. Most lenders offer up to 70% or 75% LTV for owner-occupied properties.
Bridging and refurbishment finance
If you are buying a premises that needs a significant fit-out before you can move in, a standard mortgage might not be available immediately. We use bridging finance to secure the purchase quickly. Once the works are finished and the OpCo moves in, we transition you onto a long-term commercial mortgage.
A note on SIPPs and SSAS
Some business owners choose to hold their premises within a pension structure such as a SIPP or SSAS. The rent paid by the business goes into your pension tax-free. This is a highly regulated area that requires specialist pension advice alongside our finance expertise.
What lenders actually want: the underwriting reality
Lenders perform a dual-track assessment: they look at the property as security, but they are primarily interested in the covenant strength of your trading business.
DSCR: your most important number
Lenders use the debt service cover ratio to see if you can comfortably afford the loan. Most UK lenders look for a DSCR of 125% to 150%, meaning your business's adjusted net profit must be at least 1.25 to 1.5 times the annual mortgage repayments.
Lease terms between OpCo and PropCo
Even though you own both companies, a formal arm's-length lease must be in place. Lenders want to see a clear document outlining the rent, the term (usually matching or exceeding the mortgage term) and repair obligations. This is a legal requirement that protects the lender's security and ensures the rent flow is documented for tax purposes.
Experience and professionalism
Lenders favour businesses with a clear story and at least two to three years of clean trading accounts. If you have a Good or Outstanding rating in regulated sectors such as a CQC-registered surgery or an Ofsted-rated nursery, this boosts covenant strength and can unlock lower interest rates.
Risks and realities
Liquidity risk: a commercial building is illiquid. If your business needs a sudden cash injection, you cannot sell a wall. Make sure your business has working capital separate from the property equity.
Maintenance and rates: as a tenant, some repairs were the landlord's problem. As the PropCo owner, everything from the roof to the business rates is yours. Budget for a sinking fund.
Interest rate fluctuations: most commercial mortgages are variable or fixed for a set period of two to five years. Be prepared for the possibility of payments increasing when your fixed term ends.
SDLT and transaction costs: stamp duty land tax on commercial property starts at 0% up to £150,000 and rises in bands above that. Specialist valuations and legal fees are higher than residential equivalents.
Why The Mortgage Consultancy
An OpCo PropCo purchase sits at the intersection of business finance, property law and tax planning. You need a specialist who speaks all three languages.
We do not operate in a vacuum. We coordinate directly with your accountant and solicitor to make sure the finance fits the tax-efficient structure they have designed. We have deep relationships with boutique commercial lenders and private funds that specialise in SME premises and often offer more flexible interest-only periods or more generous LTVs based on your business's future growth, not just its past.
Frequently asked questions
How much deposit do I need for a commercial premises?
Most lenders expect a 25% to 30% deposit for an owner-occupied property. If your business is particularly strong, we may be able to secure 80% LTV, meaning you only need 20% down.
Can I use my pension to buy my office?
Yes, via a SIPP or SSAS. This is highly tax-efficient as the rent paid by the business goes into your pension pot tax-free. HMRC limits borrowing to 50% of the pension's net value, so you need enough cash in the pension to cover the rest.
Does my business need to be profitable to get a mortgage?
Lenders generally want to see two years of profitable accounts. They look at your EBITDA to ensure you can afford the rent that pays the mortgage.
What is market rent in an OpCo PropCo structure?
HMRC requires the OpCo to pay a fair market rent to the PropCo. If you set the rent too high or too low to shift profit, you could trigger a tax investigation. A surveyor will provide a market rent figure as part of the valuation.
Can I buy a property partly rented to someone else?
Yes. This is called a mixed-use or multi-let commercial mortgage. It is a useful way to buy a building for your own use while having other tenants help pay the mortgage.
Is it better to buy in personal name or a limited company?
For most business owners, a limited company (the PropCo) is more tax-efficient and provides better asset protection. Personal ownership is becoming rarer because of higher personal tax rates on rental income.
Last updated: 10 May 2026