What to do if you agree to let your tenants run a Home Business from your property

In my recent 33 days of tips post on permitting tenants to run a home business from their rented property, I reported on a change in the law.

This was brought about by sections 35 and 36 of the Small Business Enterprise and Employment Act 2015 which provides for a ‘home business’ to be run from people’s rented homes without their tenancies falling with the Landlord & Tenant Act 1954.

This is important because the LTA has a different set of rules for tenancies which fall within its ambit. In particular, landlords are unable to use section 21 (because section 21 is only available for tenancies governed by the Housing Act 1988) meaning it could be more difficult to evict tenants.

However now this is less of a problem. Which is good. Many businesses (including mine) are run from home without any impact on neighbours. Clearly, this is something that should be possible under a normal residential tenancy.

Practical issues about allowing a Home Business

However, if your tenant comes to you, explains that they want to run a low impact business from home and asks your permission, and you are happy with that – what do you do next?

The notes to the model tenancy agreement says

The landlord’s consent to a home business must be provided either through the terms of the tenancy agreement or by the landlord’s subsequent consent or agreement to such a home business.

So:

• If you agree to the home business use at the start of the tenancy, you can amend the tenancy.
• If you agree to the tenants starting a home business after they have moved in, you need to have a written agreement which amends the terms of the tenancy agreement.

In order to help landlords in this position, I am now providing a Home Business agreement form in Landlord Law (similar to the pets agreement forms we have had for some time).

The Home Business agreement forms set out the business which is being granted permission limits the agreement to this specific business and sets out conditions. These include:

• A prohibition on anything which would bring the tenancy under the provisions of the LTA, and
• Requirements that any business must
  • Not cause any nuisance to neighbours
  • Additional wear and tear on the property
  • Be carried out in a proper and legal manner
  • Etc

When signed up the form will serve to amend the tenancy agreement and should then be kept with it (with tenants being advised to do likewise with their copy).

Hopefully, it will make life a little easier for Landlord Law members in this position. Landlord Law members will find out more about it on the tenancy agreements links pages and also on the landlords’ forms page.