The simple answer to this question is that working from home does not affect tenancy agreements. Running a business from a rented property, however, is an entirely different matter. While it is usually considered a courtesy to inform your landlord if you will be working from home on a permanent or hybrid basis, using the property to set up and run a business will involve a legal process.
However, this does not mean that the process cannot still be relatively straightforward with the right support and advice.
There has been a significant increase in home working since the COVID-19 pandemic, so it is understandable that landlords and tenants are still figuring out the legalities of this when it comes to rented properties. Therefore it is important to make it absolutely clear that running a business from a rented property is different from working from home – as long as the home working arrangement uses less than 40% of the rented space.
Some cases where this can become slightly more complicated is when it comes to self-employment (for example builders or beauticians) who may conduct day-to-day business activity elsewhere but complete administrative tasks in a home office. Usually, though, these types of home working arrangements will still require no special terms or paperwork.
However, it would be in the landlord’s best interest to gather all the necessary information to make sure no further legal documents need to be written up. Other times when working from home may require more than a courtesy agreement is if utility bills are included in the original rent agreement and therefore may need to be adjusted. Whether working from home or setting up a business, all situations should be assessed on a case-by-case basis.
Can you run a business from a rented property?
Due to the complications that can arise from tenants running businesses from rented properties, landlords were usually advised to say “no” to these requests from tenants. Since the 2015 Small Business and Employment Act was introduced, stating “a business of a kind might reasonably be carried on at the home”, the scope for refusal has significantly narrowed.
The statement above lacks specifics, meaning there is no set list of businesses that can or cannot be run from rented properties. Therefore, it is now generally much more likely that landlords will agree to the request. Despite this, landlords are still able to establish rules and conditions that must be adhered to.
There are still legitimate concerns that can be handled with certain conditions such as stating that there shall be no change to the look of a property or that any increase in visitors to the property as a result of the business will not cause nuisance to neighbours.
Any agreement should be put in writing which will present the opportunity for the landlord to establish requirements or restrictions. For example, this could include confirmation of business insurance and any steps that will be taken to prevent damage to the property as a result of the business. It is also advisable to check the terms of the mortgage to ensure it does not stipulate that the property can only be used for residential purposes.
Need landlord & tenant advice?
When matters relate to investment property and occupied premises, our members at Mercantile Barristers can provide practical legal advice to landlords and tenants on matters arising from their specific circumstances.
