Before consenting to your tenants basing their work from your property, it’s important to understand what you’re within your rights to refuse as a landlord, as well as what your tenant’s rights are when it comes to running a business from home.
In the first instance, it’s important to clarify the difference between ‘working from home’ occasionally, and basing an entire business at your address.
However, in short, it is legal providing the property remains primarily residential, which means that no more than 40% of it should be used for commercial purposes.
As many small businesses are often operated from a home office (eg, spare bedroom) or one-room workshops (eg, the garage or shed), this shouldn’t be a problem, but it’s best to make this clear to your tenant when they approach you about their business, just in case.
Further to this, tenants must have confirmation from you (in writing) that you are happy for them to run their business from home, so make sure you’re confident that their intentions are clear and you’re fully comfortable with them. However, regulations that came into play in 2015 mean that landlords cannot ‘unreasonably’ deny permission if a tenant asks to run a business from their home.
There are three main grounds on which a landlord can refuse permission to run a business from their residential property.
If a tenant does approach you about running a home business and you’re unsure if their proposal could fall under any of the above points, you are able to check with your legal advisor, letting agent or Property Manager, or the Citizens Advice Bureau.
If you are happy to have a tenant running a business from your property, there are some other things to consider when drawing up the tenancy agreement. If you have previously included heating, internet or electricity bills in your rental price, be aware that your bills could drastically increase if the tenant works from home on a regular basis. You can mitigate any losses by either raising the rent of requiring tenants to pay for heating and electricity directly to the utility providers if you don’t already.
You must also ensure that your tenant has their own public liability insurance in place if they’re providing a service – this is particularly important if the service itself is being run from your property, such as personal training, beauty or cosmetic treatments or holistic therapies. It would be worth checking any terms of your landlord insurance policies, too, as existing policies are likely only to cover residential use. If an incident occurs at the property because of undisclosed business use, your insurance claim may be refused.
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