Home Business Tenancy

Tenancies 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 renew 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 run 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”. Such a tenancy is expressly 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, under 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 was an assured shorthold tenancy).

If a tenancy meets the following conditions, it will be regarded as a “home business tenancy” for 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.

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 occupation contract can also be a “home business tenancy”, and they are effectively the same 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:

  • Dentist
  • Mechanic
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