With home ownership at an all-time low and small business stats climbing, you may wonder whether your home business is legal. Read on to learn the ins and outs of running your business when you’re a renter.
Residential vs Commercial Properties: What Does the Law Say?
These days, the line between business place and dwelling can be seriously blurred – especially since many people occasionally work from home. In 2015 the government passed the Small Business, Enterprise and Employment Act, which set out to make things a little clearer. It gives tenants the right to work from home, provided it remains a residential space and the landlord gives written permission.
What Counts as a Residential Property?
The simple rule of thumb is that the property must first and foremost remain a home. If you plan to sell things face-to-face, install industrial equipment or section off spaces for business, it will likely become a commercial space – we touched on this in our article explaining business rates.
Getting Permission From Your Landlord
You will need to ask your landlord’s permission to run a home business before you begin. This sounds daunting, but fortunately the law stipulates that permission cannot be “unreasonably withheld or delayed”. This means that if your business is reasonable, they cannot block it.
Reasonable home businesses include translation, web design, proofreading and consultancy.
When Can a Landlord Refuse Permission for a Home Business?
Your landlord can reasonably withhold permission if your business would be damaging to their property or breaches your tenancy agreement. Acceptable reasons include:
- It goes against the terms of your tenancy agreement.
- Your business would cause substantial wear and tear to the property.
- Your business would be a nuisance to neighbours or other tenants, for example with noise or smells.
- You plan to serve alcohol – the Small Business, Enterprise and Employment Act 2015 states that “A business is not to be treated as a home business if it involves the supply of alcohol for consumption on licensed premises”.
- You plan to use the property primarily for business, and not residence.
- The property looks like a commercial let – for example, if you plan to install specialist equipment or section off areas.
- The business breaches the landlord’s insurance or mortgage.
Check for Planning Permission and Licenses
Don’t forget that some home businesses need further permissions. For example, to set up a home baking business you will need to register your premises with the local council and pass a hygiene inspection with the Food Standards Agency before you are allowed to trade.
Keep Your Landlord Informed of Any Changes
Once you have the homeowner’s written permission, remember to inform them of any changes such as new equipment. Remember, they’re a business owner too – and being courteous and transparent may well pay off in the future.