Can My Tenant Run A Business From A Residential Rental Property?

Tenant Running Home Business

In short, tenants can run a “reasonable” business from a rental property, usually without much risk to the landlord. And I go into much more details on that in my How To Setup A Tenancy Agreement To Allow A Home Business blog post.

However, right now, I want to elaborate on whether tenants require their landlord’s permission before running a home business from the rental property, and if so, whether landlords can refuse permission.

This is one of those contentious and annoying issues that can confuse the hell out of landlords, because there’s so much misinformation out there. If you, like me, Googled for the answer to the question being asked, you’ll come across several websites that provide two contradicting answers:

  • Landlords cannot refuse tenants from running a home business without a reasonable reason
  • Landlords can refuse tenants from running a home business

It can’t be both, so which is it?

Just to give you some context, my tenant recently asked if she can run a “beauty treatment” service from her rental property. I had no intention of refusing her request, but it did lead me down a rabbit hole – because I wanted to ensure I fully understood the implications for both parties [landlord and tenant].

Despite being a landlord for over a decade, surprisingly, it’s the only time a tenant has asked to run a “home business”, so I wasn’t entirely sure what the deal was.

The first question I pondered was, “Does my tenant even need to ask my permission?”, which is how I quickly discovered that there’s a lot of misinformation out there.

So what’s the answer?

Full disclaimer: I’m not qualified to give legal advice, so do NOT take this as such. However, I will provide you with arguments for why I believe that the correct answer is:

Tenants should receive written consent before running a home business! However, landlords can refuse consent, and they don’t need to provide a reason for doing so, let alone a “reasonable” one.

Although, I will argue that unless there’s a legitimate reason to do so, I can’t imagine why any sane landlord would refuse. But that’s besides the point, because we just want to know what our legal rights are.

Just to clarify, an example of a “reasonable” ground to refuse permission would be if running a home business would breach the terms of the landlord’s insurance or mortgage policy, or cause disturbance to the neighbours.

Landlord’s consent to tenants running a business from home

Most standard tenancy agreements will contain a clause which prohibits tenants from running any form of business at the property. For example:

The Tenant shall not use the Property for the purposes of conducting a business.

Technically, landlords could therefore claim that the tenant is not permitted to run a business from home. However, this clause can be overridden, either by amending the tenancy agreement, or creating a separate legal agreement that outlines the terms of the business.

Also, just to note, it is possible to find tenancy agreements which permit home businesses from the offset, in which case, the tenant doesn’t need any further consent.

Why do I believe that’s the correct answer?

One of the highest ranking articles in Google search results that addresses the question is on ArthurOnline.co.uk, hosted on their blog. Arthur Online provides Property Management Software for Landlords.

They say, I quote, “you [the landlord] cannot refuse permission on unreasonable grounds.”, as per the Small Business, Enterprise and Employment Act 2015.

I read through the Act and I personally couldn’t find anything that suggested that was the case. Although, English Law isn’t exactly written in plain English – what a fucking mess. But I digress. Feel free to check it for yourself. Good luck.

A news item published on Romans.co.uk, a local estate agent, also say something very similar:

“regulations that came into play in 2015 mean that landlords cannot ‘unreasonably’ deny permission if a tenant asks to run a business from their home”

Both articles then go onto listing the same reasons that constitute “reasonable” grounds for landlords being able to refuse their tenant permission from running a home business.

Funny enough, both articles are VERY similar, it looks as if one of them pretty much plagiarised the content. Naughty.

Essentially, I didn’t really trust the information, least of all because one of them appears to be infringing copyright laws (I couldn’t tell which one). But moreover, neither of them provide legislative or legal services. So it was nothing personal against them.

That’s when I decided to continue my search, but this time, I wanted to find information from more reputable sources (i.e. solicitors, landlord associations), and that’s when I came across the following articles:

None of the articles seem to imply that landlords cannot refuse a tenant’s permission from running a home business with or without reasonable grounds, but rather, it’s solely their decision. I’ll copy a few quotes from each source that make the argument:

Paris Smith legal firm

This article looks at whether it is okay for landlords to allow their tenants to work or run a business from home.

We expect most landlords are consenting to tenants working from home provided they are not in breach themselves of their own policies as stated above – to not do so would significantly reduce the pool of tenants who are able to rent their properties.

Accounts and Legal Consultants

As a tenant, you must notify your landlord and ask permission to run your business from home.

If a business meets the Act’s criteria as ‘a business of a kind that might reasonably be carried on at home’, then the landlord can agree to your renegotiate request.

It’s important to remember that the landlord’s permission only applies to one type of business – the one that you requested.

Landlord Law

If you want to allow a home business this should be set out in your tenancy agreement or in another separate legal document.

Landlords Guild

for the avoidance of doubt, prior written consent from the landlord is required before a tenant may carry on a home business. There is no requirement for the landlord to reasonably consider any request either. Therefore, just as before you can choose whether to allow a home business or not.

Like I said, I can’t imagine why any landlord would want to refuse their tenant permission unless there is a legitimate reason to do so. But of course, everyone has their own circumstances – with nuances – so I wanted others to be aware of the conclusion I arrived at, and how I got there.

What if my tenant continues to run a home business without my approval?

So, in the event that your tenant is running a home business without your permission, consequently breaching the terms of the tenancy, and they’re ignoring your demands to stop running the business, my presumption is that you have grounds for eviction, specifically ground 12, “The Tenant has breached any term of the tenancy agreement (other than one relating to the payment of rent).”

Yes, eviction is an aggressive approach, so it’s not a decision I would take lightly, and I would consider it as a last resort. However, in some cases it might be the only sensible option. For example, if the nature of the business defies the definition of “home business”, or compromises your position somehow, like invalidating your mortgage or insurance policy.

Before making any rash decisions, I highly recommending seeking legal advice from qualified professionals. LegalforLandlords.co.uk offers free legal advice to UK landlords.

Let’s wrap it up…

I’d be interested to know how you interpreted the information I presented, and what you think is the correct answer to the question [can landlord’s blanket refuse tenant’s from running a home business]?

Now that you read this blog post (hopefully) – once again – I can only encourage you to read my How To Setup A Tenancy Agreement To Allow A Home Business blog post – because it covers a lot more ground, including potential restrictions that may prohibit landlords from allowing tenants to run a home business!

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