Are you allowed to work from home in a rented property?
Are you a freelancer living in a rented property planning to work from home? If so, discover what your legal rights are.
The government has become interested in freelancers. The gig economy, as it has become known, has grown significantly since the internet has become faster and more reliable.
It is now thought that one in four people work from home. And why not work from your kitchen table or spare bedroom? Who wants to deal with the daily commute?
But, as handy as working from home may be, there are several issues you need to consider. The government likes to have a hand in business – mostly to tax us efficiently – but also to make sure the land is being used as intended.
And it’s not just the government who may have a say on where you work. Your business could have an impact on your neighbours, or your insurance company might have a problem with you storing stock or expensive work equipment in your home.
If you’re setting up your freelance business from a rental property, you also need to get advice. Your landlord may be legally obliged to issue you a Business Tenancy Agreement at which point you may not be able to live there anymore.
What the law says about working from a rented property
Before 2015 it was almost impossible to run a business from a rental property. The Housing Act 1988 and the Landlord and Tenant Act 1954 made it difficult to live in a commercial property or to do commercial activities from a residential property.
The landlord, if they issued you a Business Tenancy Agreement, would then be forced to renew. Essentially, they would be offering you an assured lifetime tenancy. Landlords are not often willing to do this, as it would make selling the property a challenge.
In 2015, the Government, realising the current bind, introduced the Small Business, Enterprise and Employment Act (SBEEA). This act allowed landlords to issue a Home Business Tenancy. So if you are a freelancer and a tenant, if you ask the landlord if you can run your business out of the home, they should say yes.
Be aware that the law is not backdated. This means that if you signed your agreement before 2015, this law does not apply. Equally, if you are renewing an existing assured short-term tenancy agreement, it does not count here either.
Questions you need to ask about working from home
It is likely that your landlord will still seek legal advice, as they are obliged by law to issue you with the correct tenancy agreement.
Therefore, they need to be sure that you are a freelancer running a home-based business, rather than just a small business. Why? Well, there are all sorts of legal and financial implications when running a business. If you trip over the line between a freelancer and a small business, you could create issues for yourself and your landlord.
Here are four questions you need to ask yourself about working from home:
- Will I need planning permission to set up as a freelancer from my home?
- Will I need to pay business rates?
- Will I need specialist insurances to cover stock and/or equipment related to my business?
- Will I need liability insurancefor people entering the property as my customer?
What happens if you bring work home in the evenings?
If you bring work home from the office in the evening, you could be designated as working from home. However, it is unlikely that the house will be listed against the business, and it is equally unlikely that your neighbours would ever know.
But if you are running a beauty salon from your bathroom, then the additional traffic in your area and the increased parking issues are going to start to impact on the area. Also, if you are receiving deliveries to your home or storing stock in your garage, there are obvious impacts on traffic and the insurances you need.
Most freelancers will be fine, up until the point the business begins to grow. If you are a success and you need to employ someone, or you need to invite more and more customers to the house, then your home business could just become a business.
What does all this mean?
There are some simple tips to follow when living in a rental property and working as a freelancer.
First, you should inform your landlord that you are working from the property. You should let them know the nature of the work and what it all means. They will then issue you a Home Business Tenancy Agreement, or they will seek legal advice to see if this constitutes a business with broader implications.
You should then continue to reflect on the nature of your business as you grow. It might be that at some point you will need a commercial property separate to your home. The increase in insurance and the attitude of your landlord might make it necessary to make these changes.
Colin Bates is the Director of Mackenzie and Dorman, a leading solicitors based in Belfast, Northern Ireland.
Photo by Jeff Sheldon