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Running a business from home certainly isn’t unusual; 59% of non-employing business owners do it. But the rules surrounding running a business from a rental property (and whether you’re entitled to do so), can be a little cloudy.
The first step would be to check what your current tenancy agreement says.
For a tenant to run a business from a rental residential property, written permission from the landlord is necessary. However, since the passing of the Small Business, Enterprise and Employment Act 2015 (section 35), a landlord can’t withhold permission without a ‘reasonable’ justification.
If it’s likely that you’ll be causing a disturbance to people living around you, or the nature of your work might diminish the condition of the property, your landlord will have justification to deny your request if they choose to.
So, if you’re renting a small flat and looking at a career in carpentry, teaching the bagpipes or training boisterous dogs, for example, you’re likely to get some pushback. If you’re baking cakes or freelance writing, there shouldn’t be much of an issue (although, of course, we can’t speak for every individual case).
It’s worth bearing in mind that if you use too much floor-space for work, the property may be deemed ‘commercial’ rather than ‘residential’, resulting in the owner breaching the terms of their mortgage arrangement. This can also be considered a reasonable justification for a landlord to withhold permission.
Remember, if you’re at home all day using gas, electricity, and water, your bills will be substantially higher. If bills are included in your rent, your landlord will likely want to increase how much you pay them to make up the difference.
Similarly, If you work from home, you may be subject to business rates for the part of your property you use for work, while still paying council tax for the rest of it.
According to the Government, you don’t usually have to pay business rates for home-based businesses if you only use a small part of your home (i.e. a desk in your bedroom) for your business, or just sell goods by post.
However, you may need to pay business rates on top of your council tax if:
If you’re not sure whether you’re subject to business rates, take a look at the Running a Business from Home page on gov.uk. the Valuation Office Agency will be able to assist in telling you if your home has been assessed for Business rates.
If you’re trading to the public from the premises, creating a spike in road traffic or making any sort of difference to the living conditions of your neighbours, you may not be able to proceed without planning permission from the council. This should be approached tactfully when speaking to your landlord, as in most cases this is likely to create extra work for them.
You’ll want to consider sufficient business insurance if you’re running a home business, but it’s also important to check with your landlord that their existing policies aren’t negated by your decision to work from home.
In some cases, a polite call to your landlord might be able to clear up any misunderstandings about your business. For example, they may have the wrong end of the stick, and assumed that your home photography business is a busy family portrait studio rather than you editing snaps on your laptop.
If your landlord continues to refuse your request to run a home business without a reasonable reason, contacting your council or local authority would be your best move.
Depending on the work you do, you might be able to claim expenses back for using your home as an office, either by claiming for office equipment like computers and furniture, or even renting part of your home to your company.
To find out more, check out our article Working from home? What you can and can’t claim as an expense.