Requesting permission to run small business from home?

SJE89

I have a mortgage with Halifax and I am currently in the process of trying a start up business. An idea that has been brewing for years, but I'm a procrastinator/self-doubter. This is the furthest I have ever tried to get with an idea.

One hurdle I wasn't expecting is that it may be an infringement of my mortgage terms to want to run my own business.

I asked Halifax today via online chat if I could and they asked me to write them a letter.

So I have put together the following;

Dear Sir or Madam,

I am writing to request permission to operate a small business from my home, in accordance with the conditions of my mortgage which I hold with Halifax PLC.  I have held the mortgage with Halifax PLC for the past 3 full calendar years. The proposed business is a home-based bakery, specialising in the production of cakes, biscuits, cookies, brownies, and similar baked goods. In addition, I intend to provide buffet food and catering services for small events.

All food preparation and production will take place within my home, and I wish to assure you that there will be no customers visiting the premises. Furthermore, I do not plan to make any alterations to the property to accommodate the business, as the premises are already equipped for the needs of said business. The operation will be conducted in a manner that maintains the residential nature of the property and complies fully with all relevant regulations and will be registered with the Local Authority and HMRC.

The property will be the registered address of the business for correspondence and tax purposes. I am not relinquishing my current paid full-time employment, and this business will be conducted in my free time to provide myself and my family with additional income. 

I kindly ask for your written consent to proceed with this business activity so that I may remain compliant with my mortgage agreement. If you require any further information or documentation, please do not hesitate to contact me.

Thank you for considering my request. I look forward to your response.

Yours faithfully,

Does this sound ok?

I want to be sure I do this properly and give myself the best chance of a positive response.

If the idea fizzles out or doesn't work I don't want it to be because I did something silly like breaching the terms of my biggest financial commitment.

ACG

Most people would just do it and not ask.

I think the fact no customers are going to your home generally deem it as acceptable. You probably need some sort of insurance - will your buildings insurance cover the business for example? With food being involved you will need food safety certificate and probably permission from the council.

I dont know what the answer will be in all honesty, I know people who work from home but I dont know any who have asked.

SJE89

https://forums.moneysavingexpert.com/discussion/comment/81956682#Comment_81956682

Would it not flag the property up on HMRC as being registered as a business? I am too much a worrier to do something like this in any clandestine way, especially as the potential impact could be catastrophic?

I have registered with the council and have my food safety training certificates already. I did them a year ago. That's how long I consider things for.

I have also considered insurance implications and currently looking into public liability insurance. I will be telling my home insurers, but not expecting anything major to change because there's not changes to the contents of my house as I have owned everything I'll be using for some time and I don't need to purchase additional equipment.

ACG

Higher risk of a fire? I dont know about buildings insurance, but car insurance if you want to use it for work - you need business cover. Buildings might be similar?

I doubt halifax would access HMRC for where businesses are registered. For a time my business was registered at my accountants which was also his home address.

user1977

Not sure why you think the Halifax has some sort of hotline to HMRC's database of business addresses, or how HMRC would know exactly what is happening on the premises where the business is registered? In reality the Halifax aren't going to know, and are very unlikely to care much even if they did know - what they don't want is somebody getting a residential mortgage for what are actually commercial premises. And it doesn't sound like you're even close to that.

eddddy

If you'd gone ahead without informing the Halifax - probably the worst that could happen would be that they'd write you a letter telling you to stop (but it's unlikely even that would happen).

Similarly, if you say nothing to the council, but the council find out and think you're breaking planning rules - they'd write you a letter telling you to stop.

But your buildings and contents insurance might be a much bigger issue. For example, if your commercial cooking activities started a fire which burned your house down, your insurers might refuse to pay - because it was caused by commercial activities, rather than domestic activities.

And do you want insurance to cover your equipment and stock? e.g. If a water leak or flood ruins your stock? If somebody steals your equipment - maybe from your home, or from your car? (And if you're using your car to buy ingredients, deliver products, etc - you'll need relevant insurance for that.)

Plus Public Liability and Product Liability insurance - in case you accidentally give somebody e-coli or salmonella poisoning, or you didn't declare that there might be sesame traces in the bread rolls you supplied.

Plus you need to register your food business with the local authority, and I think they probably do inspections. (Anecdotally, I've heard that it's very difficult to get a typical domestic kitchen to meet commercial kitchen hygene regulations.)