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Tenants working from home? Then check the contract!

With home working looking like it’s here to stay, Frances Burkinshaw points out that in some cases, this new norm could be breaking a tenancy agreement.

Frances Burkinshaw

Link to Lettings featureHistorically most people have got up in the morning, had their breakfast and then either driven the car or caught the train or bus to their place of work. We never thought much about the habit of going to work – many never really considered that we could or should work from home.

COVID-19 has changed all that. The Government’s message was ‘stay at home’ unless you had to go to work. So many people did ‘stay at home’; they occupied a spare room or a corner in their homes where they could set up an office. For many this proved to be very successful – they could perhaps have a better life/work balance; they didn’t waste precious hours travelling or commuting; they could share childcare and other domestic duties such as cooking and cleaning. For some, of course, the idea of sharing such duties was anathema to them!

Business purposes prohibited

One consequence of home working is the change to travel. I fear that, due to the success of home working, train and bus companies will have to revisit their ticketing. Nobody will want to buy a monthly season ticket to London only to use it perhaps eight times in that month. There will have to be flexibility where perhaps you buy a number of journeys – the more journeys you buy the cheaper the tickets.

It’d be understandable for the landlord to simply agree to a home business. Simply agreeing is not to be advised. Thought and care should be given to the situation.

Another issue and a very important one is whether ‘working from home’ is permitted under Tenancy Agreements. Very often there is a clause in the TA stating that the property is to be used solely as a residence and using it for business purposes is prohibited.

Home business tenancy

There are any number of concerns to think about in such a situation. The good news is that in October 2015 the ‘Small Business, Enterprise and Employment Act 2015’ came into force. Under Sections 35 and 36 a new concept of a ‘home business tenancy’ was introduced.

Frances Burkinshaw image

Frances Burkinshaw

The importance of this mustn’t be underestimated since the main danger for landlords was (and still could be) that the tenancy could fall within the protection of Part 2 of the Landlord and Tenant Act 1954 and therefore be deemed to be a business tenancy with the many dangers that such a tenancy could introduce for the landlord – such as becoming protected!

This Act now, effectively, allows landlords to permit residential tenants to run a ‘home business’. The tenant should still seek permission from their landlord. Such businesses could include internet businesses, remote secretarial work, small crafts such as knitting or sewing, financial consultancy etc.

There are any number of pitfalls that would have to be considered and some of these are listed here – this list is by no means complete and therefore landlords should take care and advice before giving permission for a home business unless it is obviously a small home business.

  • Might planning permission be required?
  • Will Council Tax be affected?
  • Will the building insurers need to be notified and permission granted?
  • Are large deliveries and collections going to be made to and from the property?
  • Will the neighbours be upset if large vehicles regularly visit the property?
  • Will there be a lot of noise which might upset the neighbours?
  • Is the business going to be registered as a company with the registered address being at the rented property?
  • Will the rented property be the address on the letterhead or business card and would this matter?
  • Will more of the property be used for the business or will most of the property be used for residential purposes?
  • There will, of course, be far more wear and tear on the property than if the tenants were out at work all day, each day.

It would be understandable for the landlord to simply agree to a home business. Simply agreeing is not to be advised. Thought and care should be given to the situation.

Frances Burkinshaw is an experienced independent trainer available nationally for in-house, group or Zoom-style training.
01892 783961 or 07887 714341 or [email protected]

August 25, 2020

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