Tenancies which are granted for business use will more often than not have protection under Part 2 Landlord and Tenant Act 1954. This gives the tenant a right to a renewal of their tenancy whenever the fixed term expires. Essentially giving the business a tenancy for life. Where a tenancy is granted for a home but the tenant wishes to operate a business from that home, the position can become unclear and landlords could be worried about giving consent for the tenant to also operate a business from their property.
Section 35 of the Small Business, Enterprise and Employment Act 2015 allows a landlord to grant a “home business tenancy” and such a tenancy is specifically excluded from any protection under Part 2 Landlord and Tenant Act 1954. This applies to any new home business tenancy granted from the 1 October 2015 except:
- a tenancy which is entered into before 1 October 2015 a tenancy which is entered into on or after 1 October 2015, pursuant to a contract made before that day; or a periodic tenancy which arises at the end of the term where the original tenancy was before 1 October 2015 (where the tenancy is an assured shorthold tenancy).
If a tenancy meets the following conditions, it will be regarded as a “home business tenancy” for the purposes of the legislation:
- a dwelling-house is let as a separate dwelling,
- the tenant or, where there are joint tenants, each of them, is an individual, and the terms of the tenancy— * require the tenant or, where there are joint tenants, at least one of them, to occupy the dwelling-house as a home (whether or not as that individual’s only or principal home), * permit a home business to be carried on in the dwelling-house, or permit the immediate landlord to give consent for a home business to be carried on in the dwelling-house (whether that be a particular home business, a particular description of home business or any home business), and * do not permit a business other than a home business to be carried on in the dwelling-house.
3.24.1 What Is A Home Business?
A “home business” is defined as: a business of a kind which might reasonably be carried on at home.
But, a business is not to be treated as a home business if it involves the supply of alcohol for consumption on licensed premises which form all or part of the dwelling-house.
There are provisions allowing regulations to be made prescribing cases in which businesses are, or are not, to be treated as home businesses.
An “assured shorthold tenancy” can also be a “home business tenancy”. They are effectively the same thing if the tenancy contains the terms mentioned earlier. Mixed use (mixed commercial and residential premises) have special rules under the legislation.
A business which could “reasonably be carried on at home” might include:
- Web designer Accountant
- Financial advisor
- Businesses which might not be suitable could include: