‘No trade or business’ on lease

Ruth03

Can anybody advise? We are in the process of buying a property whereby the freehold has recently been purchased by current owners. However, there’s also a lease in place (due to there being a management company).

As a side venture we bake cakes & sell them (we solely deliver them). It’s only a small side business.
The problem we have is that the lease states ‘no trade or business’ to be carried out at the property.
Are we going to have to move & keep this a big secret (it seems ridiculous as it’s just baking in our kitchen), or is it wise to withdraw from the sale due to potential future consequences?
Any advice would be much appreciated.

HampshireH

How would you keep it a secret?

You will need insurance, been seen carrying boxes of cakes from the property regularly and would you not need to advertise & register the business address with companies House?

It seems a bit foolish to buy a property in the knowledge/intention of breaching the lease albeit there may never be a consequence.

Perhaps the freeholder could grant consent? Or are you buying the freehold too?

eddddy

Ruth03 said:

Can anybody advise? We are in the process of buying a property whereby the freehold has recently been purchased by current owners. However, there’s also a lease in place (due to there being a management company).

It probably depends on a few things...

• Is it a house (as opposed to a flat)?

• And are you buying the freehold as well as the leasehold?

• Is it a tripartite lease - i.e. between 3 parties, the freeholder, the leaseholder and the management company?

• Assuming it's a house, is the lease covenant about 'no trade or business' being transferred to the freehold title?

If, for example...

• you're buying the freehold and leasehold, and 
• it's a lease with only 2 parties (Freeholder and Leaseholder), and
• the 'no trade or business' covenant isn't being transferred to the freehold title

- then there's probably no problem.

You'll be the leaseholder and the freeholder - so I doubt you'll take legal action against yourself for breaching the lease.

 

user1977

What's your solicitor's advice? 

Ruth03

eddddy said:

Ruth03 said:

Can anybody advise? We are in the process of buying a property whereby the freehold has recently been purchased by current owners. However, there’s also a lease in place (due to there being a management company).

It probably depends on a few things...

• Is it a house (as opposed to a flat)?

• And are you buying the freehold as well as the leasehold?

• Is it a tripartite lease - i.e. between 3 parties, the freeholder, the leaseholder and the management company?

• Assuming it's a house, is the lease covenant about 'no trade or business' being transferred to the freehold title?

If, for example...

• you're buying the freehold and leasehold, and 
• it's a lease with only 2 parties (Freeholder and Leaseholder), and
• the 'no trade or business' covenant isn't being transferred to the freehold title

- then there's probably no problem.

You'll be the leaseholder and the freeholder - so I doubt you'll take legal action against yourself for breaching the lease.

 

Thanks - It’s a tripartite lease so we would be the freeholder, leaseholder but then there’s a management company. 

Could the management company take action against us?

Ruth03

Ruth03 said:

eddddy said:

Ruth03 said:

Can anybody advise? We are in the process of buying a property whereby the freehold has recently been purchased by current owners. However, there’s also a lease in place (due to there being a management company).

It probably depends on a few things...

• Is it a house (as opposed to a flat)?

• And are you buying the freehold as well as the leasehold?

• Is it a tripartite lease - i.e. between 3 parties, the freeholder, the leaseholder and the management company?

• Assuming it's a house, is the lease covenant about 'no trade or business' being transferred to the freehold title?

If, for example...

• you're buying the freehold and leasehold, and 
• it's a lease with only 2 parties (Freeholder and Leaseholder), and
• the 'no trade or business' covenant isn't being transferred to the freehold title

- then there's probably no problem.

You'll be the leaseholder and the freeholder - so I doubt you'll take legal action against yourself for breaching the lease.

 

Thanks - It’s a tripartite lease so we would be the freeholder, leaseholder but then there’s a management company. 

Could the management company take action against us?

Also it’s a detached house with quite a lot of space around.
I’m so confused as it’s the perfect house for the kids but all of this info has come to light…

canaldumidi

Ruth03 said:

Ruth03 said:

eddddy said:

Ruth03 said:

Can anybody advise? We are in the process of buying a property whereby the freehold has recently been purchased by current owners. However, there’s also a lease in place (due to there being a management company).

It probably depends on a few things...

• Is it a house (as opposed to a flat)?

• And are you buying the freehold as well as the leasehold?

• Is it a tripartite lease - i.e. between 3 parties, the freeholder, the leaseholder and the management company?

• Assuming it's a house, is the lease covenant about 'no trade or business' being transferred to the freehold title?

If, for example...

• you're buying the freehold and leasehold, and 
• it's a lease with only 2 parties (Freeholder and Leaseholder), and
• the 'no trade or business' covenant isn't being transferred to the freehold title

- then there's probably no problem.

You'll be the leaseholder and the freeholder - so I doubt you'll take legal action against yourself for breaching the lease.

 

Thanks - It’s a tripartite lease so we would be the freeholder, leaseholder but then there’s a management company. 

Could the management company take action against us?

Also it’s a detached house with quite a lot of space around.
I’m so confused as it’s the perfect house for the kids but all of this info has come to light…

Not sure why the perfection for the kids is confusing - the trade/business prohibition is unconnected.

But yes, the Manco could take action, and as pointed out there are numerous ways they'll find out. You'll need insurance, I imagine the council will need to approve for Planning use, (non residential), and don't EH need to inspec tthe kitchen?....overall puting hge amounts of £ into a property where you know you're not allowed to do what you plan todo seems .... rash.

user1977

canaldumidi said:

Ruth03 said:

Ruth03 said:

eddddy said:

Ruth03 said:

Can anybody advise? We are in the process of buying a property whereby the freehold has recently been purchased by current owners. However, there’s also a lease in place (due to there being a management company).

It probably depends on a few things...

• Is it a house (as opposed to a flat)?

• And are you buying the freehold as well as the leasehold?

• Is it a tripartite lease - i.e. between 3 parties, the freeholder, the leaseholder and the management company?

• Assuming it's a house, is the lease covenant about 'no trade or business' being transferred to the freehold title?

If, for example...

• you're buying the freehold and leasehold, and 
• it's a lease with only 2 parties (Freeholder and Leaseholder), and
• the 'no trade or business' covenant isn't being transferred to the freehold title

- then there's probably no problem.

You'll be the leaseholder and the freeholder - so I doubt you'll take legal action against yourself for breaching the lease.

 

Thanks - It’s a tripartite lease so we would be the freeholder, leaseholder but then there’s a management company. 

Could the management company take action against us?

Also it’s a detached house with quite a lot of space around.
I’m so confused as it’s the perfect house for the kids but all of this info has come to light…

Not sure why the perfection for the kids is confusing - the trade/business prohibition is unconnected.

But yes, the Manco could take action, and as pointed out there are numerous ways they'll find out. You'll need insurance, I imagine the council will need to approve for Planning use, (non residential), and don't EH need to inspec tthe kitchen?....overall puting hge amounts of £ into a property where you know you're not allowed to do what you plan todo seems .... rash.

I can't see it mattering from a planning point of view if it's merely baking in a standard domestic kitchen as ancillary to the residential use of the property (any more than I need to get consent to use my spare room as an office).

sheramber

It is not merely baking in a domestic kitchen.  There are restrictions on kitchens used for preparing food. You need to register with Environmental Health who will inspect the premises. 

user1977

sheramber said:

It is not merely baking in a domestic kitchen.  There are restrictions on kitchens used for preparing food. You need to register with Environmental Health who will inspect the premises. 

Sure. But that's a separate matter from planning.

Lunchbox

It’ll depend on the nature of the business. If you’re baking a couple of cakes a week and delivering them elsewhere, it’s unlikely to be a problem. These clauses are there to prevent nuisance to neighbours from constant deliveries (or outgoing deliveries), trade vehicles, visitors, smell nuisance, noise, perceived risk to neighbouring properties or any other disturbance. If you think your business will go completely unnoticed you’re likely to be ok. However, if there’s any reason at all for a neighbour to become annoyed and complain to the management company, they may well try and enforce the terms of the lease.