It’s a question that start-ups and SMEs often ask and one that is usually prompted by the need to keep overheads as low as possible while getting the business off the ground. The answer is less clear-cut, however, and much will depend on where you live, whether you’re the property owner or tenant, and the kind of business you want to run from home.
What if you own the property?
Before going ahead, you need to find out if there are any so-called restrictive covenants that prohibit certain uses of your property, including a ban on business use. The title to the property (see the Land Registry site) should list any restrictions and also be sure to check the documents you were given by your solicitor when you bought the house to see what, if any, restrictions are present.
What about the neighbours?
Even if there are no restrictions, by starting a business at home you could cause a nuisance to neighbours through extra noise, an increase in visitors or deliveries to the property etc. This will depend on the type of business you are planning of course, but if the neighbours do complain and the nuisance is considered to hinder their enjoyment of their property, you could face legal action.
What does your mortgage say?
Double-check the terms of your mortgage to see if you need the lender’s consent first; if you have a residential mortgage this may prohibit you using the property as a business premise. To do so without notifying them could be considered a breach of contract, resulting in serious consequences.
If you are intending to make structural changes to your home or there is likely to be a material change to the property caused by the nature of your business, you should consult your local authority before going ahead. Depending on what type of business you’re planning, you may also need to apply for a licence from your local authority. Businesses that need a licence include those offering child care, B&Bs and guesthouses.
Running a business from your home could affect the rate of council tax you have to pay as business rates may be liable for the part of the home you use for business purposes. Again, check with your local authority first.
Rented or leased property
Check the terms of your lease or rental contract. If there are no restrictions, you will have to get your landlord’s permission before you can operate a business from the property. If the landlord gives his or her consent, make sure you get a new agreement drawn up and signed. A landlord can refuse permission if they think the nature of your business will cause extra wear and tear to their property or the business operation will cause a nuisance to the neighbours. They can also refuse if they think the lease should be changed from residential to commercial but they can’t withhold their consent ‘unreasonably’. That said, in order to prove the landlord’s refusal is ‘unreasonable’, you may have to seek legal advice.
Running a business from a council house
Always consult your housing association or local council to check if you can run your business from your council house. Much will depend on the nature of the business but if they do grant you consent you may have to sign a new agreement. On the other hand, the council can refuse permission for the same reasons mentions above, namely if they think the business will be a nuisance to neighbours or cause excessive wear and tear to the property. It’s important to note that running a business from your council home could affect your council tax as well as any benefits you receive.
Running a business from your garage or shed
If you are setting up an office in your garage for example, and don’t make a material change to the building or cause a nuisance to your neighbours as described above, there is nothing to stop you from going ahead. If the nature of your business changes in future or the operation expands, you may have to seek planning permission or apply for a licence.
What about insurance?
If you have building and contents insurance for your home, check to see if running a business will affect the terms of your policy and what is and isn’t insured. You may have to seek the consent of your provider before going ahead and a new policy reflecting the change drawn up and signed. If you employ staff or the public has access to the property, you should also consider taking out public liability and employers’ liability cover.
The GOV.UK website has more information on running a business from home.