Increased protection for landlords and tenants running home businesses
From 1st October 2015 new legislation will come into force to change the treatment of tenants carrying on home businesses in a let property.
Currently, if a tenant leases residential premises but uses that premises for the purpose of a home business (even if in breach of the lease) they could attract the protection of the security of tenure provisions under the Landlord and Tenant Act 1954. These provisions give qualifying business tenants the right to stay in occupation of the premises at the end of the contractual term, to apply to Court for a new tenancy agreement.
New legislative changes taking effect next month will bring a welcome change to the position, offering landlords increased protection. Changes to the Landlord and Tenant Act 1954, made by the Small Business, Enterprise and Employment Act 2015 will have the effect of excluding residential tenancies which allow home businesses from the security of tenure provisions.
From 1st October, if a house, or part of a house is let to individuals, under a lease which provides that the premises is to be occupied as a home but allows the tenant to carry on a home business, or allows the landlord to consent to the carrying on of a home business, that tenancy shall be excluded from the security of tenure provisions. Furthermore, a tenancy shall also be excluded from the provisions if a tenant breaches their lease by using such a property for a business purpose, even if the Landlord had consented to or allowed the breach. The effect of which shall make it easier for a landlord to regain possession of the premises at the end of the contractual term.
The purpose of this amendment is to encourage business growth. By offering landlords the assurance that such a tenancy shall be excluded from the security of tenure provisions, it is hoped that more landlords will allow houses to be let with provision for a home business to be carried out. How these new provisions will take effect in practice is yet to be seen, the definition of a ‘home business’ is fairly vague, and this will no doubt require further clarification through case law. The new legislation does however provide for Regulations, which are yet to be seen and implemented, and which may assist further.
If you are considering granting a lease of premises and wish to ensure exclusion from the security of tenure provisions please contact our Property Department who will be pleased to assist you in.