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 quick answer
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.
Why might a landlord withhold permission?
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.
What else should I consider when running a business from a rental property?
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:
- your property is part business and part domestic, for example if you live above your shop
- you sell goods or services to people who visit your property
- you employ other people to work at your property
- you’ve made changes to your home for your business
If you’re not sure whether you are subject to business rates, the Valuation Office Agency will be able to assist.
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.
Can I appeal a landlord’s decision?
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.