restrictive covenants - Home Business

Ultimatechezz

Hi All,

Just looking for some advice.

I am currently in the process of starting up a small home business making small amounts of natural cosmetics to sell (not a large amount) at home.

I contacted my mortgage company to let them know over the phone, they were happy so I asked for this in writing.

I have received the letter today in which they have enclosed a copy of a transfer in 1988 to two people I don't know for the property, they point out that there are restrictive covenants which state that I may not use the premise for anything else other than private dwellings!

In the letter, the mortgage company didn't actually say for example, therefore you can't run a business, they just say "I trust this clarifies this for you.

My question is, is there anything I can do to continue. I have only just come across "Restrictive Covenants" so have already been in touch with Trading Standards, HSE, Council, BIS etc as well as buying a shed and getting electricity connected etc.

Any ideas/advice very much appreciated!

Cheers

colino

On one hand you have to clarify with your mortgage company what they mean - it could become pretty inconvenient if they want you to immediately pay back the loan by being in breach of their conditions. Secondly it is pretty unusual to get permission to operate a business from a local authority, especially for manufacture, in a private residence if you ask.
Doing it in a shed, basement, attic etc., are all irrelevant.

Atidi

Ultimatechezz wrote: »

Hi All,

Just looking for some advice.

I am currently in the process of starting up a small home business making small amounts of natural cosmetics to sell (not a large amount) at home.

I contacted my mortgage company to let them know over the phone, they were happy so I asked for this in writing.

I have received the letter today in which they have enclosed a copy of a transfer in 1988 to two people I don't know for the property, they point out that there are restrictive covenants which state that I may not use the premise for anything else other than private dwellings!

In the letter, the mortgage company didn't actually say for example, therefore you can't run a business, they just say "I trust this clarifies this for you.

My question is, is there anything I can do to continue. I have only just come across "Restrictive Covenants" so have already been in touch with Trading Standards, HSE, Council, BIS etc as well as buying a shed and getting electricity connected etc.

Any ideas/advice very much appreciated!

Cheers

The mortgage company is only really interested in getting their monthly repayment and you not adversely affecting the value of the property against which that capital is secured.

If you want to start running a business from your home, you need to be speaking to people like your insurance company and the local council who will be interested in local planning and possible business rates being applied.

The restrictive covenant on the property will cause you a problem if you plan to use the property for anything that the restrictive covenant prohibits. But that is not insurmountable.
You can get a restrictive covenant removed, essentially by getting the agreement of those who currently benefit from that restrictive covenant, who are presumably your neighbours.
Whether your neighbours will agree to you running a cosmetics factory in their residential area I can't say.
The successful removal of the restrictive covenant may also leave you liable to a Stamp Duty Land Tax charge.

I suggest you seek independent legal advice.

martindow

Doesn't it depend on the nature of the covenants. If the two people who can enforce them are no longer in the area or interested twenty five years later they are not such an issue. Sometimes developers impose covenants to make sure no one does anything to make the selling of houses difficult. Once the development is done and all of the houses are sold they may not be interested any more. If the covenants can be enforced by a neighbour that is different matter.

Ultimatechezz

I believe I would be in breech of terms and conditions of the mortgage, at least thats what they said on the phone. In the letter I got it makes no mention of terms & conditions just "I hope this clarifies the matter" after quoting the covenant.

I have spoken to the neighbors who don't have an issue with what I am doing.

It's not exactly a factory, more like an 8x6 shed which I will be making limited amounts of products using mainly food grade products, veg oils and the like to sell at craft fairs etc.

There will be no increased traffic, parcels, noise etc

I have just emailed the business dept. at the local council to see if this is an issue...it's not like I have a massive factory with loads of deliveries etc?

If I didn't tell next door or anyone, they wouldn't know...by that I mean it wouldn't be obvious..

there are loads of people who sell on craft stores who make cosmetic product (Soap) etc at home...maybe they don't know if they have anything restricting them...or ebay business etc?

Cheers

Vectis

Oh dear.....if it doesn't affect anyone (and you've spoken to your immediate neighbours anyway) then why are you creating potential problems by contacting the mortgage company and the Council?

I would have advised to just get on with what you wanted to do, as it doesn't affect anyone.

No doubt now the Council is involved you'll get bogged down in red tape.

Re the letter from the mortgage company - I would take this to read that they really aren't bothered. So long as you pay the mortgage each month they wont worry.

Kayalana99

Ultimatechezz wrote: »

There will be no increased traffic, parcels, noise etc

I have just emailed the business dept. at the local council to see if this is an issue...it's not like I have a massive factory with loads of deliveries etc?

If I didn't tell next door or anyone, they wouldn't know...by that I mean it wouldn't be obvious..

Your creating yourself a string of problems that didn't need exist!!

Just run your business from your shed and don't bother the local authorties or your mortage company...

If the business grows and you need to re locate great! If not who is actally going to know your doing it ...now except your neighbour?

Mistral001

I would have thought, making cosmetics is in fact an industrial process as suggested above and not a something comparable to making food product as the Op suggests. Is using the ingredients that are "food grade" going to guarantee that the cosmetics are safe and not leave you open to getting sued if for some reason someone has a rare condition that makes their skin reacts with one of your products?

In short, the problems with the mortgage and neighbours might be the least of your problems.

Savvy_Sue

Are any smells going to emanate from this garden shed? Nice or nasty, that might annoy the neighbours.

Atidi

Kayalana99 wrote: »

Your creating yourself a string of problems that didn't need exist!!

Just run your business from your shed and don't bother the local authorties or your mortage company...

If the business grows and you need to re locate great! If not who is actally going to know your doing it ...now except your neighbour?

Yeah, I don't think cannabis farmers ever worry about notifying the mortgage company or the local authority in advance.

And lots of them are getting away with it ... :cool: