What permissions you might need to run your business from your home
Over the past year and a half government restrictions have prevented many of us from returning to the office. Given that the Coronavirus Act 2020 has not been repealed yet, it is important to remember that similar restrictions might very well be instituted again. Because of this, it is worth exploring the rules surrounding running a business from your home.
What does it mean to run a business?
Distinguishing between regular employment and self-employment can often be difficult. However, there are a few indicators which suggest that an individual is running a business. They must be:
- Responsible for the success or failure of the business, bearing the risk of failure with their own money.
- Using their own money to buy business assets and cover running costs, providing all or the main tools and equipment for their work.
- Making a loss or a profit, rather than a consistent salary.
- Able to decide what work they do and how they do it
- Able to work for more than one client
- “In business for themselves.”
If this sounds like your working arrangement, it is highly likely that you are running a business.
When do I need permission from others to run my business?
Using your home for operating a business often impacts the property or neighbours’ enjoyment of their own properties. It is advisable to check whether you need approval to run your business. This approval will depend on the nature of the property from which you intend to work.
Though you might own the premises, you might still be prevented from running a business as a result of “restrictive covenants.” Check the property title online at the Land Registry website to find out whether your property is burdened by any restrictive covenants. Additionally, your business may cause a nuisance to neighbours. If it causes damage to your neighbour's property or hinders their enjoyment of it, you will be open to legal liability. Finally, if the property is mortgaged, it is worth checking the terms to see whether it contains a prohibition against running a business. Equally, you should find out whether you need to switch partly or wholly to a commercial mortgage.
Always check the tenancy agreement you’ve signed up to. Many of these contracts explicitly prohibit tenants from using their residence as a base for a business. If there is no explicit prohibition on business services, you should seek written permission from the local authority or housing association to operate. However, even if your tenancy agreement does prohibit the running of a business from the property, you can still approach the council in the same way as you would have had the prohibition not be included. If the council do in fact agree, you would just need to ensure that your tenancy agreement is reworded and re-signed to reflect this.
When gaining permission from your local council, it is likely that you will be asked to fill in forms that outline the details of your business plan- including how you plan to advertise it, changes to the property and the predicted level of interference your business may have with surrounding properties or car parks.
Permission is at their discretion, and the housing authority may refuse it if they consider that the business might cause damage to the premises or disrupt your neighbours.
Much the same as above. Check the tenancy agreement for any prohibitions on business use. If there is no prohibition then ask the landlord for permission. A landlord cannot ‘unreasonably’ withhold or delay permission for running a business in the property but they can refuse permission on certain grounds. As above, they can deny permission if they believe it changes the nature of the let; if it might cause wear and tear, or; if it might cause nuisance to your neighbours. They may also refuse due to the policies of their mortgage or insurance providers.
What else do I need to do to run my business from home?
- Obtain planning permission - You may need this if you’re making alterations to the premises, or if operating the business will cause a ‘material change’ in how your property is used. You should consult your local authority with the intention of getting a Certificate of Proposed Lawful Use or Development.
- Obtain licensing - Many types of business require applying for a licence from the local authority. Businesses that need a licence include pet shops, child care services, B&Bs, guesthouses and gambling.
- Work out council tax - Consult the local authority to find out whether business rates are owed for the part of the home you use for business purposes. Equally, you can check the government’s Valuation Office Agency.
- Work out insurance - Check how running a business will impact any building/contents insurance policies you might have previously taken out. Your home insurance might not extend to cover your business. If you are using staff on the premises, it may also be worth taking out public liability and/or employers’ liability policies.
If you are looking to negotiate or renegotiate your letting agreements, Legislate is a contracting platform where parties can create easy-to-understand and legally valid agreements on their own terms. If you are a small business looking to branch out and service clients, read our materials on making a consultancy agreement or download 'Definitive Guide to Business contracts' for more information.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.