It has often been debated whether a tenant can work from home.
If a landlord permits the operation of a business, they could unintentionally create a tenancy under the Landlord and Tenant Act 1954, meaning that the tenant will have the automatic right of renewal under Part II of this Act.
Are Tenants Allowed to Work from Home?
The Government has reacted by passing section 35 of the Small Business, Enterprise and Employment Act 2015, see here: http://www.legislation.gov.uk/ukpga/2015/26/section/35/enacted
This gives a new definition to a Home Business Tenancy.
A Home Business Tenancy is any tenancy under which the tenant occupies the rental property as a home and is also permitted to operate a home business from the premises.
A home business is defined as any business that can reasonably be run from homes, but excludes any business involving the sale or supply of alcohol.
An agreement that is a Home Business Tenancy will automatically be excluded from the Landlord and Tenant Act 1954 and will be a tenancy of a single dwelling under the Housing Act 1988.
The Housing Act 1988 already allowed some home working, if the tenancy was mainly used to provide a home for the tenant. Now, all forms of home working will be permitted and these tenancies will fall under the Housing Act 1988.
However, although the landlord can now be confident in whether their tenant can work from home, there are other parties to consider.
Mortgages, superior leases and insurance policies often include clauses requiring home use only and prohibiting any business use of the property.
Depending on the wording of these clauses, landlords may not be able to permit business use by their tenant, even if it is a home business.
The Government’s changes will not apply to any tenancy that exists before the new rules are implemented or renewals of tenancies that exist before.
Although letting agents and landlords may welcome these changes, it is not clear how many will benefit.