Working from home...impact on mortgage?

andy1314

Hi all,

I'm currently in the process of applying for a mortgage and my partner has suggested she would like to start a treatment room in the house to do massage and nails etc. This is something she used to do before having children and whilst I doubt it'll be a massive earner, it's something she can easily do in the day and evenings when I'm back.

My query is, do I need to let the banks know we would be operating a "manual" business (in that she would be applying treatments to people and not just running a website/computer based) on the site, will it affect the mortgage type or rate or a banks interest in us? Initially I would assume we'd just need extra insurance for house to cover her for injuries and complaints etc but just in case....

thanks for your time all.

The_J

Having clients come into the property is the major problem here. If it was a home office it would be fine.

I would suggest to your wife to put her plans on hold until the remortgage process has completed.

andy1314

Thanks for the quick response, does that mean we need to look for a new type of mortgage or does the building need to be treated in an entirely different way, not a house any more but a place of work?
I just want to explore what extra costs or inconvenience it might cause having it as a working business in the house.

The_J

I don't want to say too much if you know what I mean, if the place of work is something that can be set up/put away quickly and it will be low key you might be alright.

Strictly speaking, it's a different ballgame.

HappyMJ

I would just get a normal owner occupied mortgage. You can rent a room to your business. You need the local council's approval to run a business that has customers visiting your home. They are usually OK with it if you have some off street parking.

You will need insurance. It's called Public Liability insurance. You would also need to consider Professional Imdemnity Insurance and if you run the business through a company you should also have Employers Liability insurance.

andy1314

Is that the way it would have to be done officially, rent the room to the business?
Hadn't thought about the council approval, thanks for that point.

Thrugelmir

You would need your lenders consent or some of your insurance policies would be void in the event of claim.

RenovationMan

There may also be restrictive covenant on the property title deeds to prevent you from running a business. The council will also want to know so that they can look at charging you business rates instead of council tax.

HappyMJ

andy1314 wrote: »

Is that the way it would have to be done officially, rent the room to the business?
Hadn't thought about the council approval, thanks for that point.

It's for tax purposes. You would rent the room to the business for let's say £50 a week and each of you declare then £25 of income on each of your personal tax returns (as it is a jointly held property) less £25 a week of expenses (such as mortgage interest, gas, electricity, water, insurance, etc) so no profit and no tax due. The company then has a receipt from you for £50 a week and deducts that from annual income to reduce tax payable. You would charge the company/business an amount every week so you do not make a profit.

The council may or may not charge you or the company business rates but they usually like to know. There is an exception on small businesses anyway so nothing will be due. Neighbours might complain about a lack of parking and you have permission then it helps.