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Can a Tenant Run a Business from My Property?

By: Sarah Clark (ILEX) - Updated: 8 Jul 2017 | comments*Discuss
 
Tenant Business Planning Permission

It’s estimated that around one in four people now carry out some of their work from home, due to the way the working environment has changed in the last decade or so.

Most British households have Internet access and a personal computer or laptop, making it much easier to work from home full or part time, but there are obviously pitfalls for landlords who rent out a residential property to someone and the tenant decides that they want to use it for business as well as residential use.

What is Business Use?

A residential tenancy and a commercial tenancy are different in law, so if your prospective tenant is likely to carry out their business from your property, your general residential tenancy agreement isn’t going to cover them to do so. It must also be one or the other type of agreement, it can’t be a residential tenancy with ‘a bit of business use’ – there are legal and financial implications from using a residential premise as to carry on a business.

Legislation supports the distinction between the two - The Housing Act 1988 excludes business tenancies - and the Landlord and Tenant Act 1954 doesn’t apply to residential tenancies. Unfortunately, though, with advances in working practices the different situations that a tenant could find themselves in don’t always slot neatly into one or the other.

Common sense would dictate that when you’re deciding whether a tenancy is a business or as residential tenancy, you’d look at the main use – so if the tenant uses the property as a home but also works from the spare room occasionally, it’s a residential tenancy. However, the Court of Appeal ruled a few years ago that a tenancy which had started off as a business use tenancy, but had changed to become just a residential one was still covered by the Landlord and Tenant Act 1954. In another case, a doctor rented a flat and asked the landlord for specific permission to practise from there, although he had separate consulting rooms apart from the residential premises. It was decided that this wasn’t a business tenancy but it might have been if he didn’t have the separate consulting rooms.

When a Tenant Works from Home

There are several situations that might require a tenant to work from home;

1. They might bring work home from the office sometimes;

2. They may work on the road – a salesman for example – and bring paperwork back to do, using the premises as a base but not a registered business;

3. They could be working remotely for a business based somewhere too far away to commute;

4. They may run a sole trading business from home;

5. They may be running a multi-person business from home, taking deliveries and collections, seeing customers and storing stock;

6. They may be running a Bed and Breakfast, a Nursery, or even letting the property out as a holiday home!

The first two situations are clearly residential tenancies – many people have to take work home sometimes. Again, it’s also pretty obvious that situations 5 and 6 are businesses – but where do you draw the line on situations 3 and 4?

Assured Tenancy Agreements

Most standard Assured Tenancy Agreements contain clauses that prohibit some uses, and the clause should read something like:"Not to receive paying guests or carry on or permit to be carried on any business, trade or profession on or from the property." – If it’s clear that your tenant is seeing clients at the property or using the property as a business, they may be in breach of their agreement.The reason for a clause like this is that if a tenant runs their business from your property, it needs to have planning permission and they need to pay business rates. If there’s no planning permission and the tenant isn’t paying the correct rates, the tenant is legally liable, but it will be you as a landlord who gets chased first by the authorities.

The property is likely to need planning permission if:

  • The property is no longer mainly a private residence;
  • What it’s being used for is considered unusual in a residential area;
  • The tenant trades to the public from the premises;
  • Using it as a business might impact on traffic or cause a nuisance with people calling at the property
  • The use is likely to create excess dust or smells.
  • Practically speaking, many people freelance from rented properties. However to err on the side of caution, I would advise that you consult your landlord and also the local planning department.

Freelance Tenants

Clients who work freelance are likely to work from home as standard – so what’s the situation if, for example, your tenant is a freelance writer working from a spare bedroom? As far as planning permission is concerned, running a home-based freelance writing or IT business isn’t likely to impact with more traffic or visitors, so it’s not likely to cause too much of a problem.

If your tenant is a freelance hairdresser or beauty therapist however, the situation is slightly different, as there will be more people, traffic and potential parking problems.

All of these situations are subject to legal definition and if there was a dispute it would be judged on its merits, so if you’re in any doubt as to whether to let your property to a freelancer or allow them to carry on business from home, seek professional legal advice.

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[Add a Comment]
Jimena - Your Question:
Hello, we want to rent a house, and we want to run a proper business. Do we have to ask for any license or is just to have an agreement with the landlord? Thank you

Our Response:
You would have to ensure your landlord is aware and agrees to your proposal. With regards to having a licences, much depends upon what sort of business it is you wish to open.
ThePropertyLandlord - 10-Jul-17 @ 2:46 PM
Hello, we want to rent a house, and we want to run a proper business. Do we have to ask for any license or is just to have an agreement with the landlord? Thank you
Jimena - 8-Jul-17 @ 4:36 PM
Lee - Your Question:
Iam a homeowner and my neighbours are housing association tenants where one seems to be running a business from home as a gardener. When she does jobs she brings the garden waste home dumps it on the road in order for it to be collected by the council. I also keep getting random knocks from strangers as our door numbers are similiar and she has posted the address on facebook. Also for parcels. I have two small children this worries me

Our Response:
Much depends upon whether the association allows tenants to run a business from home - you would have to check the terms and conditions of your tenancy agreement. Also, you can complain directly to the housing association if your neighbour is causing a disturbance. Fly tipping is an offence and your neighbour could be charged for this, please see link here.
ThePropertyLandlord - 26-Jun-17 @ 3:40 PM
Iam a homeowner and my neighbours are housing association tenants where one seems to be running a business from home as a gardener. When she does jobs she brings the garden waste home dumps it on the road in order for it to be collected by the council. I also keep getting random knocks from strangers as our door numbers are similiar and she has posted the address on facebook. Also for parcels ... i have two small children this worries me
Lee - 25-Jun-17 @ 5:13 PM
@Freddie - the best thing to do is just ask the landlady to sort it out. If you don't ask..........
Jan - 19-Jun-17 @ 10:50 AM
I have been living in a rental property for 10 months, I have now learned that the previous tenant officially registered/ran her (failed) business at the property for two and half years, she has also continued to use my property/address for the past 10 months via mail redirection/interception.The Letting Agent was aware and did not enforce the terms of the Tenancy Agreement. I have reported this/followed-up ALL of the necessary organisations and progress is very slow.Her personal/financial/Electoral Roll data remains at my address. Is the Letting Agent or the Landlord liable for any direct/indirect losses/costs I have incurred?Can the Letting Agent or the Landlord threaten the ex tenant with legal liabilities, e.g. used the residential property for her registered business and has continued to use my address for all of her business and personal activity? Thanks so much in advance of your guidance.
Debs - 16-Jun-17 @ 7:08 PM
As a tenant, I share a driveway with another tenant, the landlady and another neighbour. The driveway is the responsibility of the landlady and her neighbour.Currently soft vegetation is now encroaching upon the drive, brushing against vehicles, but they seems unconcerned about this.Whether soft or hard vegetation, should those responsible have a duty to ensure clear access is provided.
Freddie - 16-Jun-17 @ 12:15 PM
Char - Your Question:
Can a tenant working for an agency (tutoring) work from a rented property?

Our Response:
Much depends upon the terms and conditions of your lease. I'm sure it would go unnoticed if you had one or two students visiting the house. However, if you had several and were using your sitting room as a classroom and hosting several children at a time, this would be slightly different. Therefore, checking your contract or discussing this with your landlord directly is what you should do next.
ThePropertyLandlord - 15-May-17 @ 12:05 PM
Can a tenant working for an agency (tutoring) work from a rented property?
Char - 14-May-17 @ 1:22 PM
nadia - Your Question:
Hello EveryoneI am living in a rented house. Can I start my own business from that house? I hope if I ask the landlord he will straight away say no. Should I ask him? What law say about this situation?Can anyone answer my question

Our Response:
It depends upon what the business is and what the terms of your contract are. If the business is a proper business (not just working from home on your laptop), then you would have the landlord's permission in writing to allow you to do this.
ThePropertyLandlord - 10-May-17 @ 2:26 PM
Hello Everyone I am living in a rented house. Can I start my own business from that house? I hope if I ask the landlord he will straight away say no. Should I ask him? What law say about this situation? Can anyone answer my question
nadia - 6-May-17 @ 5:46 PM
If i had an Icecream van is this classed as running a business from home
Manners - 4-May-17 @ 11:00 PM
If i had an Icecream van..Selling on the street..And i live in a housing association flat is this classed as running a business from home
Manners - 4-May-17 @ 10:57 PM
Hi everyone, I am starting by own business (cakes, baking) form home. I am renting a flat andI have to ask my landlord for permission. I will be more than grateful, if anyone will help me to create a simple letter and help me to put all info together. This is small business, there will be no clients coming into house, I will have full insurance, food hygine ceryficate etc... If someone have similar situation I will be grateful for help... Please advise me how the letter should look like? Many thanks
March - 26-Apr-17 @ 10:08 PM
@Jollyness - I'd say if you are worried about entering the tenancy, don't. Trust your gut instinct and look for a place where you can guarantee your privacy. Ol.
Ollie78 - 13-Apr-17 @ 1:51 PM
Hi I'm looking to move in to a grade 2 listed property Where I have been allocated some rooms and then there are communal arears. The house has several room and the landlord has now told me that she will be doing b&b from 1 section on the house. They will use my front door and the same hallway as me. Where do I stand? Also the landlady will be doing weddings in the property. Strangers will have access as there is no designated access? And I have dogs. I need to protect them. I'm worried about entering this tenancy
Jollyness - 12-Apr-17 @ 10:52 PM
muppett - Your Question:
I rent my 4 bed detatched house for £1250 but tennants said they want to turn part of outbuildings into a dog kennals.where they get paid for it.i know id need to inform council and they have to pay business rates.however coul I ask them for more rent ? They intimated kennals could bring in about £5k per monthRegards Ray

Our Response:
I advise making sure you are fully conversant with turning your residential property into a business venture before you make any agreement. Firstly, if the overall character of your dwelling will change as a result of the business, then you will need to apply for planning permission, please see link here. Yes, you will be able to ask for more rent as the tenant's contract will have to change - it would be advised to have this agreed and drawn up professionally. However, setting this up will require significant cost and outlay and I suggest you do some more research into this and/or seek some legal advice.
ThePropertyLandlord - 27-Mar-17 @ 10:45 AM
I rent my 4 bed detatched house for £1250 but tennants said they want to turn part of outbuildings into a dog kennals .where they get paid for it.i know id need to inform council and they have to pay business rates .however coul i ask them for more rent ? They intimated kennals could bring in about £5k per month Regards Ray
muppett - 26-Mar-17 @ 9:14 AM
Cath - Your Question:
Hello. I'm currently renting a flat and working full time away from where I live. As a hobby I am a food blogger, and will be starting to host supper clubs & running food stalls, all at external venues away from my flat. I am looking at setting up as a Sole Trader in order to get liability insurance cover etc. I will need to use my flat to prepare and cook food. Where do in stand in terms of tenancy rules around this? My tenancy cotract has a line in stating that the property is for residency only and not to carry out any business or profession! Any help on this would be appreciated. Thanks

Our Response:
If you are using your flat to cook large amounts of food in and it may inconvenience your neighbours in any way i.e deliveries, smells, stock holding and it looks as though you are running a business from your home, then you are over-stepping the mark in terms of your agreement. If your tenancy agreement specifies you are not to run a business from your home, then you will be in breach of it.
ThePropertyLandlord - 22-Mar-17 @ 2:20 PM
Hello. I'm currently renting a flat and working full time away from where I live. As a hobby I am a food blogger, and will be starting to host supper clubs & running food stalls, all at external venues away from my flat. I am looking at setting up as a Sole Trader in order to get liability insurance cover etc. I will need to use my flat to prepare and cook food. Where do in stand in terms of tenancy rules around this? My tenancy cotract has a line in stating that the property is for residency only and not to carry out any business or profession! Any help on this would be appreciated. Thanks
Cath - 22-Mar-17 @ 10:08 AM
We rent a private house off my sister.we pay a lot of rent. Wen we took it on there were sheds in the garden now full of our stuff.if the landlord/my sister takes one of the sheds. Do we have rights.such as discount in the rent.or can she just take it we have no say .very unhappy tennants.
Gez - 18-Mar-17 @ 7:28 PM
Hello there, I am a highly professional hairdresser who has always been attached to a salon. I have recently gone self employed and I have been working as a hairdresser form home. I have rented my property for 5 years and hadn't expected the business to be doing do well. My rent is very high and so are my bills. I would like to be legitimate about dong this but I am am scared of it being impossible as I ama single mum who is responsible for two boys and the fact that I can work from home is a god send. I am weighing up the pros and cons of renting a public space but fear my over heads would be too high. I need to make this official and wondered what my best approach would be. I am renting privately though an agent at the moment. I am not under a contract as my years contract was up in the first year.
Amy - 7-Mar-17 @ 5:56 PM
Hi, I hope you can help me. I have been renting from my landlord for 4 years. In those 4 years I have been running an online business from my home. No one calls and I don't even have an office dedicated to the business, just a corner desk in my bedroom. I have been running the business for 10 years successfully and in those 10 years I've rented 3 houses and as I moved I changed the business address. My current landlord was very aware that I ran my business from home and there has never been a problem.Last year the ceiling in the living room collapsed and when he tried to claim on his home insurance the company said it was void because a tenant was running a business from his home (me). So that caused problems with us but I was not even aware that this was an issue.I am now thinking of moving home, in fact I will be moving and I don't want there to be any issues with the next landlord however I also don't want the fact that I work from home to affect my chances of a nice place to live when I move as maybe the next landlord doesn't want the hassle? Can you please advise me if a new landlord would need to tweak their home insurance for me living there or is there some kind of insurance I could take out so he wouldn't have to? Alternatively, I own the house that my mother lives in, could I change the address that the house is registered under with HRMC but keep my actual living address on my website advertising materials? Any advice would be most welcome.Thank you.
LunaLu - 3-Mar-17 @ 8:02 PM
I rent in a small block of flats, I have lived here for seven years without problem. I run an internet based company from the flat as a broker of vehicles. No customers come to the property and the business is registered with my accountant. The Management Company (made up of a number of the other flat owners) have found out I run an internet company from home they have reported me to the landlord and advised that I am in breach of the lease. I have explained I only respond to emails and calls on my mobile from the spare room/office but the main use of the flat is residential. Can they reasonably demand I close down my business (which is my only source of income) or move out? Any advice would be helpful as I'm losing sleep over the stress of this.
Ssmith - 10-Feb-17 @ 9:57 PM
Catwoman - Your Question:
A family has rented a big bungalow next door. Wife has a van signwritten, selling sandwiches, hot snacks etc, delivering to offices etc. They get several deliveries a week of stuff from.Tesco & Asda, plus a local sausage supplier. I guess the husband does all the food preparation in the kitchen of the bungalow and I know food stuff is stored in the garage.My questions are, should they be running the business from a residential house and should there be some check made by environmental health on the way the food is prepared and stored.Thank you

Our Response:
Much would depend upon the terms of their lease. However, if they are running a business in a residential area, then it is likely there will be a clause in their lease to prevent this. You can report this to the local council if you think the property is no longer used mainly as a residential home, there’s a marked rise in traffic or people visiting the house and/or the business disturbs neighbours at unreasonable hours or creates other forms of nuisance such as noise or smells.
ThePropertyLandlord - 30-Jan-17 @ 11:20 AM
A family has rented a big bungalow next door. Wife has a van signwritten, selling sandwiches, hot snacks etc, delivering to offices etc. They get several deliveries a week of stuff from .Tesco & Asda, plus a local sausage supplier. I guess the husband does all the food preparation in the kitchen of the bungalow and I know food stuff is stored in the garage. My questions are, should they be running the business from a residential house and should there be some check made by environmental health on the way the food is prepared and stored. Thank you
Catwoman - 29-Jan-17 @ 2:42 PM
@LeNg - If you are cooking the food at home and the turnover is not large then you can possibly do this without it breaking the rukes of your contract. Where it begins to become difficult is if you begin having deliveries of food to the door, or people coming and going, storing equipment etc, or in other words when the neighbours get wind of it and decide to complain!
Di67 - 19-Jan-17 @ 11:14 AM
We want to open a mini street food van and hope to use our residential kitchen to prepare and store food (just cut vegetables, prepare sauces, store in 1 medium fridge/freezer), and we will only cook in the van. However, we worry if this might break the clause in our contract with the rule stating: "The tenant must not carry out any trade or business in the property or use it as other than a private residence". Is that the case? Our business would be carried out somewhere else and preparation and storage will not cause any disturbance to neighbours. Thank you very much for your help!
LeNg - 18-Jan-17 @ 1:51 PM
Angel - Your Question:
We bought our ground floor flat 6 years ago( 4 flats in a block) we are 2 blocks choosing to be run by Estate Management. Our lease stated that no business to be run by the owners. Since moving in 3 out of 8 flats are now being let by the owners (one is letting agency). We are having problems with tenants and wish to challenge that by the owner letting out his property is it classed as a business and therefore a breach of the original lease we all signed.not to run a business. We are mostly elderly and all struggling with the tenants, who are in early 20`s.single parent with children.and teenagers. All creating unacceptable noise levels, flooding, rubbish, dumped cars, no garden upkeep.etc. It`s a relief when one tenant leaves and then we all dread who is coming next.Another problem is we all pay towards the maintenance/upkeep towards both blocks of 4. A property company was set up years ago by all 8 flats, hence the lease we all signed, owned by all residents, to cover Insurance, maintenance etc. and now with a flooding issue from an upstairs flat, we find the original owners don`t have a separate landlords insurance on the property.it`s a minefield and we just want the 2 blocks to go back to all the owners living in the property.no more rental.no more problems Can you help please

Our Response:
Yes, it is a problem that is happening increasingly were properties are being sub-let and subsequently creating problems. However, your issue here is different from the lease saying a business should not be conducted from the property (sub-letting does not constitute a business). What needs to be clarified is the sub-letting term in the lease. If it specifies no sub-letting is permitted, then you have a case. If there is no clause in the lease ruling out letting your property out, then I'm afraid you don't.
ThePropertyLandlord - 16-Dec-16 @ 12:27 PM
We bought our ground floor flat 6 years ago( 4 flats in a block) we are 2 blocks choosing to be run by Estate Management. Our lease stated that no business to be run by the owners. Since moving in 3 out of 8 flats are now being let by the owners (one is letting agency). We are having problems with tenants and wish to challenge that by the owner letting out his property is it classed as a business and therefore a breach of the original lease we all signed..not to run a business. We are mostly elderly and all struggling with the tenants, who are in early 20`s...single parent with children...and teenagers. All creating unacceptable noise levels, flooding, rubbish, dumped cars, no garden upkeep...etc. It`s a relief when one tenant leaves and then we all dread who is coming next......Another problem is we all pay towards the maintenance/upkeep towards both blocks of 4. A property company was set up years ago by all 8 flats, hence the lease we all signed, owned by all residents, to cover Insurance, maintenance etc. and now with a flooding issue from an upstairs flat, we find the original owners don`t have a separate landlords insurance on the property...it`s a minefield and we just want the 2 blocks to go back to allthe owners living in the property...no more rental..no more problems Can you help please
Angel - 15-Dec-16 @ 9:43 PM
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