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Tenants working from home

Home Working has seen a sharp rise in recent months; not just as a result of Covid19 lockdown, but as preferred financial and environmental choice for both employers and employees.

There has also been a rise in home run businesses and as a Landlord you may be interested in knowing whether tenants are able to run a business from a rented property.

Is it legal to run a business from a residential rental property?

Firstly we should clarify the difference between ‘working from home’ on the odd occasion, and basing an entire business at your address.

Providing the property remains primarily residential, which means that no more than 40% is used for commercial purposes, it is perfectly acceptable in law to run a business from home.

For example a good number of small businesses operate from a home office (e.g, spare bedroom) or one-room workshops (e.g, the garage or shed), and this shouldn’t be a problem, However, do make sure you’re confident that your tenants intentions are clear and you’re fully comfortable with them carrying out the work they propose – although it must be stressed that UK 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.

Once discussions and verbal agreement has been reached, you would need to put it n writing to them, that you are happy for them to run their business from home

Can the landlord ‘reasonably’ refuse?

There are three main grounds on which a landlord can refuse permission to run a business from their residential property.

  1. It conflicts with the terms of your mortgage –  if your mortgage terms stipulate that your property be used solely for residential purposes then a tenant’s request to base their business from home would require you to change your mortgage. A tenant cannot demand that you change your mortgage and so on these grounds, you can decline permission.
  2. Wear and tear – The second ground is if the tenant’s business is likely to significantly increase wear and tear to the property. For most home business, this shouldn’t be an issue –– however, if the business is not desk-based there could be damage more extensive than wear and tear to your property. For example hairdressers or beauty therapists may 
  3. use chemicals. While childminding or pet sitting might prove detrimental to furnishings and fittings. Therefore please don’t be afraid to ask about the nature of the business so you can accurately assess whether it is likely to increase wear and tear.
  4. Causing a nuisance to neighbours –  You are definitely within your rights to refuse, if the tenant’s business would cause a nuisance to your neighbours. This could be noise, extra traffic/parking/footfall, so try to see the bigger picture and how it might impact on the local neighbourhood

Things you should consider if your tenant bases their business at home

If you included heating, internet or electricity bills in your rental price, your bills could drastically increase if the tenant works from home on a regular basis. It would be perfectly acceptable to raise the rent, or change your arrangement to exclude the utility element.

You must also see confirmation that your tenant has their own public liability insurance in place if they’re providing a service – especially if the service is something like  personal training, beauty treatments or holistic therapies. So be sure to check your landlord insurance policies as they may only cover residential use. If an incident occurs at the property because of undisclosed business use, your insurance claim may be refused. 

For further information on the tenants working from home call Carrick Johnson Lettings and Property Management – 01626 335090