Nicola Davies | 19th May 2020

Landlord’s consent to tenants working or running a business from home


Nicola Davies | 19th May 2020

Landlord’s consent to tenants working or running a business from home

There has never been a time where so many people are working or running a business from home. But what if you are a tenant?

Working or running a business from home if you are a tenant

This article looks at whether it is okay for landlords to allow their tenants to work or run a business from home.

Most tenancy agreements include a work-related clause usually preventing tenants from running a business from the property. Technically landlords could therefore claim that the tenant is not permitted to work or run a business from home. Landlords will need to consider whether to enforce this clause, which right now given the blanket stay on all possession claims is very difficult to do.

First thing for landlords to check is their own documents; does the mortgage, superior lease or insurance policies set out clauses that prohibit any business use of the property? If they do then you could seek permission for this to be changed? Otherwise landlords’ hands will be tied and they will not be able to permit tenants to work from home.

Landlords may see a short increase in electricity use and will as a result look to pass this on to their tenants where permitted to do so under the tenancy agreement.

We expect most landlords are consenting to tenants working from home provided they are not in breach themselves of their own policies as stated above – to not do so would significantly reduce the pool of tenants who are able to rent their properties. We would recommend ensuring any consent given is recorded in writing and that some consideration is given on whether it should be made conditional so that tenants cannot use the property address for business purposes, or trade with the public directly from the property or conduct any business meetings in person at the property.

Will I create a business tenancy if I allow my tenant to run a business from home?

So long as the main purpose of the property remains residential the tenancy created will continue to fall under the usual provisions in the Housing Act 1988. A home business tenancy will not in most circumstances attract the protection of the Landlord and Tenant Act 1954 meaning that the Tenant would not possess the automatic right to seek renewal of the lease (see s.35 Small Business, Enterprise and Employment Act 2015). The definition of a “home business” is pretty vague – apart from the obvious statement that the tenant must live at the Property and the business must be of a kind that can reasonable be carried on at home, the basic rule is that no more than 40% of the property should be used for the business.

You can read more FAQs on COVID-19 landlord & tenant issues here. Alternatively contact a member of the Property litigation team.