Naturally, there will be concerns regarding a tenant using your property for business purposes. Could it devalue the property? Affect your mortgage? Is it even legal?
A tenant can run a business from a residential property, however it’s important to know that as a landlord, you are within your rights to refuse permission.
Though there are some stipulations, a tenant is legally allowed to run a business from a rented property with your permission in writing. In 2015, both residential landlords and tenants breathed a small sigh of relief at the enactment of the Small Business, Enterprise and Employment Act; you cannot refuse permission on unreasonable grounds.
When can I refuse permission to operate in the private rental property?
You can refuse the tenant to run a business in the property if it changes your mortgage, which means that the property must remain predominantly a residential premise.
Wear and tear
If the tenant’s business significantly increases wear and tear to the property, you can refuse permission. For many businesses that are run online: writing, translating services and web design should not be an issue. However, if the business is not online and involves increased wear and tear such as a hairdresser, who may use chemicals or childminding that could affect the property.
A nuisance to the neighbours
If the business includes disruptions to the neighbours due to noisy machinery or music, you have the authority to deny permission to the tenant to run the business. Further, If the tenant will have clients visiting the property, there may also be parking issues that would inconvenience neighbours.
What your tenants should consider when running the business:
Your tenants should get permission from the council as you may be creating differences in road traffic or the living conditions of your neighbours.
Appropriate business insurance should be considered if your tenants are running a home business
Your tenants 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 if:
- your property is part business and part domestic, e.g. if you live above your shop
- the tenants sell goods or services to people who visit your property
- the tenants employ other people to work at your property
- the tenants made changes to your home for your business
As the landlord, you will also have to check if the building’s policy has any prohibitions for any commercial enterprise being operated from the premises. Similarly, you’ll have to make sure the terms of your mortgage are not being breached, or if there are any rules against the building being used for business purposes.