Freelance from Rented Accommodation

Anubis_2

Hi, I thought I would ask this here. I plan to do some freelance work (under permitted work rules, under 16 hr pw)

I have to register as SE (low earnings)

For this work there will be no clients visiting, no deliveries, it's just basically something I will be doing from bed on the computer.

I have heard of it turning the tenancy from AST to commercial. Would this be the case here? We have been here 15 years and I doubt he LL will have any issue but he might if it changes the tenancy to commercial.

Any help appreciated.

Anubis_2

Anyone?

Kynthia

Are you asking whether you are allowed to be self empoloyed in a rental property? Or are you concerned that you will be running a business from the property and it's against the terms of your AST?

Perhaps you could be a little more specific so that people know what advice you want.

Anubis_2

Kynthia wrote: »

Are you asking whether you are allowed to be self empoloyed in a rental property? Or are you concerned that you will be running a business from the property and it's against the terms of your AST?

Perhaps you could be a little more specific so that people know what advice you want.

Hi Kynthia, thanks for taking the time to respond.

I'm concerned that if I start self employment in a rental property the LL will have to turn the property into a commercial let, however I have been reading that as long as the property is mainly used as a dwelling/home then it shouldn't be an issue as only a small percentage of space will be used for "business" purposes.

Can anyone advise if the LL will be made to rent as commercial property by their mortgage provider/insurance? Or does it only really apply if there are going to be numerous deliveries/clients/noise for neighbours?

I hope that is clearer sorry,

Debt_Free_Chick

I can't see that it will be a commercial property. Fact is, it's a domestic dwelling - therefore residential - with just one room (or arguably, just a PC) used for business.

You should be OK

PlutoinCapricorn

A 'business' means many things, and the rules against running one from home are intended to avoid noise, nuisance to neighbours, health & safety problems, clients taking all the parking spaces, insurance problems etc.

A major conversion from domestic to commercial use such as making a room into a clinic or a photography studio is one thing; just sitting at your terminal as you would do anyway is not really running a business as such.

Will you be advertising your address? If not, and you are just a sole trader, no one will know.

Kynthia

Being self employed and doing some work from home doesn't mean you are running a business from the property. I can't see how your residential property would then become a commercial one.

If you need to register your business address, I'm not sure whether that would be a problem or upset your LL. I hope others can tell you more.

nikki1520

Do you rent furnished or unfurnished? If you are in a furnished let, and your landlord holds contents insurance, he will have a question on his renewal about any business run from the property. From what you've said, it sounds like "clerical only" which shouldn't affect the premium, but would affect any claim that was made if not disclosed to the insurers. As far as I know, basic landlord buildings and landlord contents insurance doesn't request this information (although this may differ with different companies.

As a landlord myself, I would appreciate being given this information, and an assurance that any business rates implications were taken care of - although in my present circumstances, my insurance doesn't require me to know. I do think that communication between landlord and tenant is key to keeping things running smoothly though.

Anubis_2

PlutoinCapricorn wrote: »

Will you be advertising your address? If not, and you are just a sole trader, no one will know.

Absolutely not. My name will be "advertised" if you like, in that it will be on the company profile, and so available publicly, but that's about it.

Thanks very much for everyone's advice - it has eased some of my concerns. It's a big step for me to take but if I never take it I never move forward

N79

Anubis wrote: »

Hi Kynthia, thanks for taking the time to respond.

I'm concerned that if I start self employment in a rental property the LL will have to turn the property into a commercial let, however I have been reading that as long as the property is mainly used as a dwelling/home then it shouldn't be an issue as only a small percentage of space will be used for "business" purposes.

Can anyone advise if the LL will be made to rent as commercial property by their mortgage provider/insurance? Or does it only really apply if there are going to be numerous deliveries/clients/noise for neighbours?

I hope that is clearer sorry,

I share your concern that this could be a commercial let (ie not an AST) but only you know the details so you need to apply Lord Dennings test to your situation to determine whether it is a commercial or residential tenancy.

You need to determine if your tenancy falls within part 2 of the LL and T act 1954 (ie it is a commercial tenancy). The definition of tenancies to which part 2 applies is

"this Part of this Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes." (S23 Para 1 of the LL and T act 1954 - my bolding)

As you can see, this act applies to properties which are both residential and business in nature and the type of tenancy is determined by the use. The definitive case in terms of applying this act is Cheryl Investments -v- Saldanha [1978] in which Lord Denning (perhaps the greatest English judge of the last century) tried to provide some practical examples of which tenancies would be residential and which would be business. In this case, the T was trying to get their tenancy declared a business tenancy. Here are his four examples (with my comments in bold):

"There was much discussion before us as to the meaning of the Business Tenancy Act (I use those words because I think 'Landlord and Tenant Act 1954, Part II' is a little confusing), especially the word 'purposes' in section 23(1); and the time or times at which those 'purposes' had to exist; and the effect of a change by the tenant in the use to which he put the property. Could he take himself in or out of the Act at his option? I found all these matters so confusing that I do not propose to attempt a solution today. I am only going to take four simple illustrations to show how the statute works; for they will suffice for our present cases.

First, take the case where a professional man is the tenant of two premises: one his office where he works; the other his flat, conveniently near, where he has his home. He has then a 'business tenancy' of his office; and a 'regulated tenancy' (today this would be an AST) of his home. This remains the situation even though he takes papers home and works on them at evenings or weekends and occasionally sees a client at home. He cannot in such a case be said to be occupying his flat 'for the purposes of' his profession. He is occupying it for the purpose of his home, even though he incidentally does some work there: see Sweet v Parsley [1970] AC 132 at 155 per Lord Morris of Borth-y-Gest. (This could be argued as being similar to your situation in that today the need for separate offices reduced. You would need to make sure that you primarily meet clients etc elsewhere though.)

Second, take the case where a professional man takes a tenancy of one house for the very purpose of carrying on his profession in one room and of residing in the rest of the house with his family, like the doctor who has a consulting room in his house. He has not then a 'regulated tenancy' at all. His tenancy is a 'business tenancy' and nothing else. He is clearly occupying part of the house 'for the purposes of' his profession, as one purpose; and the other part for the purpose of his dwelling as another purpose. Each purpose is significant. Neither is merely incidental to the other. (This does not appear to be similar to your situation.)

Third, suppose now that the first man decides to give up his office and to do all his work from his home, there being nothing in the tenancy of his home to prevent him doing it. In that case he becomes in the same position as the second man. He ceases to have a 'regulated tenancy' of his home. He has only a 'business tenancy' of it. (This would also seem to be similar to your case except you will never have had the separate office - hence you could have a "business" tenancy)

Fourth, suppose now that the second man decides to give up his office at home and to take a tenancy of an office elsewhere so as to carry on his profession elsewhere. He then has a 'business tenancy' of his new premises. But he does not get a 'regulated tenancy' of his original home, even though he occupies it now only as his home, because it was never let to him as a separate dwelling, unless the landlord agrees to the change." (This does not appear to be similar to your situation.)

Why does all of this matters? It matters because Schedule II of the Housing Act 1988 Section 4 specifically excludes "business" tenancies from being ASTs.

This means that the normal provisions for ending an AST by either the T (at the end of the fixed period without notice, with 1 month notice during any periodic tenancy) and the LL (2 months notice, not before the end of the fixed period) do not apply. Section 21 does not apply. The tenancy will not become a statutory periodic tenancy when the original tenancy expires. All the terms in the tenancy with regard to notice apply exactly as they are written.

Fortunately, since the property is mainly a house, there is, in my opinion, no question that S11 repairing obligations do apply to this tenancy but, of course, your LL may disagree.

Of course, if the LL offers you an AST with a clause which does not allow you run a business from the property then you are stuck anyway.

Anubis_2

I think I need to discuss with him. There will be no clients to meet, non coming to the house, no deliveries etc. the "office" will be my bed since I am in there 90 percent of my life so can't work in a conventional manner.

The only tool used will be the Internet. Not even a printer is needed. Thanks for the info, not sure I grasp it all yet but will look through it and check my tenancy agreement again.

ETA - just to be clear, I won't be using a room solely for business purposes - only a computer. The house is a family house, we have children, the bedroom is used as a bedroom and not an office, just using a wireless Internet device while in bed. nothing else is required/needed.

Property is rented unfurnished, is in sad need of repair, but the rent has stayed the same for 15 years and was taken over by another LL a few years ago. The previous LL took 10 k less in asking price in an agreement to keep us in the property and also asked the then new LL to keep the rent as is. The LL has kept his word and not increased rent but at the expense of it taking months to do repairs, but I can live with that.