Being a tenant and living on someone else's property applied so many responsibilities and considerations before doing anything. And now, as things are more digitized, many people have started their small businesses as a side-hustle. This is a common practice nowadays. But when it comes to starting the business in the property where you live as a rental. Here, you need to know the laws and nature of businesses, which are allowed or which are not. Well, in this article Can a tenant run a business from a rental property by AF-Residential, we are going to explore all of this. So, be with us for more detail.
The Rise of Home-Based Businesses
During the past several years, many home-based businesses have become very popular. Graphic designers, online tutors, sellers of handmade crafts, and virtual assistants are some of those working from home these days. During and right after the COVID-19 pandemic, side hustles and remote work became very common in the UK. According to the Office for National Statistics (ONS), 40% of workers in the UK performed some tasks from home in 2023, and more and more of them were also starting their own ventures. Because home working is affordable, flexible, and easy to manage, it appeals strongly to startups and freelancers. Sometimes, the process is not as easy for tenants. Most of the time, rental homes are meant for living, and the terms in the tenancy agreement usually restrict the use of the space in any other way. If the rules are not explained, tenants might mistakenly break the agreements in their lease and risk eviction.
Decoding Your Lease
A lease shows your legal responsibilities and determines what activities you are allowed on the property. When you work from home, there are clauses that matter more than others. Check for terms that express that the building is only for residential purposes, business activities are not allowed, and it must not disturb the neighborhood. They often suggest that business operations may lose some or all of their abilities to operate. Various leases let you use the home for business with an agreement, whereas some ban it completely. Under the updated agreement, tenant requests that are needed for business purposes may be requested from your landlord and allowed, provided that they agree. Opt for reading the lease in detail, and if you need answers, talk to your landlord or a lawyer before making any business decisions at your rental property.
Read this: Selective Licensing in Luton
Nature of your work
Before taking a further step, It is crucial to know the nature of your work. Like, some businesses have special rules when it comes to renting homes. Landlords and local officials tend to tell apart low-risk activities from those that carry higher risks. Let me explain how these terms are different from each other.
Low-Key businesses
Such businesses are run alone by the owner and leave the property unchanged for the community.
- Freelance work
Anyone can write or work online as an admin or a marketer from anywhere (aka freelance or remote work).
A laptop and an internet connection are enough for these jobs, as there are no visitors or packages for you to handle.
- Online Tutoring and Consultation
Giving online classes or consulting online are considered low-impact businesses because this does not involve any visitors.
- Graphic Design, Web development and Coding
These jobs include graphic design, web development, and coding. All of these need a desktop or laptop to perform the function. So, these are also considered as the less traffic containing jobs.
- E-commerce (without inventory at home)
In E-commerce businesses, items are sold online, and dropshipping is used to deliver goods; you do not have to store packages or handle deliveries yourself.
High-Impact Works (often restricts)
Commonly, these things involve activities that are physical, bring guests, or create noise, which concerns both landlords and neighbors.
- Beauty treatment and hairdressing services
Visiting your clients often, using chemicals, and making any sort of noise can go against the terms of your lease and cause problems for other tenants.
- Catering or home-based food businesses
While processing food safely, you might still end up breaking health laws, wasting more food, and facing inspection by authorities.
- Product storage and packing
Managing inventory at your home, arranging for big shipments, or processing orders can be too much for your average house.
- Repairs or workshops
The operation of machinery, power tools, or frequent coming and going in a business could cause worries about safety and inconvenience.
Read this: Can I evict the tenant for running the small business from home
Why Low- Key businesses are still a concern for many landlords in Luton
It is true that the low-key businesses do not have any physical traffic. However, it is still an issue for the landlord because the need for more electronics, printers, or extra lights can increase your energy usage and cause difficulties with the home's electrical system. It may not look important at first, but in the long run, it could create safety concerns.
Landlords should also take care of their insurance needs. Several insurers will not take care of losses or problems associated with running a business from home unless you get the company's permission. If a tenant's actions cause something to happen, like a fire in an overloaded electrical socket, the landlord may be held responsible. There are also mortgage contracts that clearly state that commercial activities are not allowed in rented places. A landlord who unintentionally rents to a business may end up violating the terms and experience major penalties. That means that whether your business is slow and easy-going or more active, landlords want to have everything set in writing. This action secures everyone and guarantees that the property works well and is well cared for.
Read this: Letting agents' responsibility
Legal limits and local law in Luton
According to the Town and Country Planning Act 1990,which is also applicable in Luton, operating a small business from home is normally allowed without any need of permission. This kind of work cannot change the nature of the use of property. It should mainly be used as a place to live rather than for any business purposes.
On the other hand, when there is the need to change the property nature, the Town and Country Planning (Use Classes) Order 1987 lists the ways in which properties can be used. Almost all buildings are considered Class C3 dwellings. Should your business operations change the purpose of the property to one involving commerce, business, and services (Class E), planning permission could be necessary.
Bottom Lines
To wrap up, It is possible to operate a business from a rental property, but anyone doing so has to pay attention to legal, contractual, and other important considerations. Business activities should be permitted in the lease, and business owners must ensure they don't make large changes to the use of the property, which needs permission to do it. Additionally, if you need more information or consultation about it, then visit AF-Residential!
External Source Links
Who are the hybrid workers? - Office for National Statistics