New regulations for residential tenancies and home businesses
Published October 27th, 2015
From October 1, 2015 any new tenancy of a dwelling in England or Wales which permits a “home business” to be carried on in the house will be exempt from the security of tenure provisions under Part II of the Landlord and Tenant Act 1954. The provision means that tenants who have established a home business use within a dwelling house with the landlord’s consent will not be able to claim security of tenure under the 1954 Act.
“The new provisions are introduced by the Small Business, Enterprise and Employment Act 2015,” explained Mark Morison of Berrys.
The Act introduces the exclusion to tenancies of separate dwellings to individuals where the terms of the tenancy:
· require the tenant or, where there are joint tenants, at least one of them, to occupy the dwelling-house as a home (whether or not as that individual’s only or principal home),
· permit a home business to be carried on in the dwelling-house, or permit the immediate landlord to give consent for a home business to be carried on in the dwelling-house, and
· do not permit a business other than a home business to be carried on in the dwelling-house.
The property must also be:
· a property let for mixed residential and business use is capable of being let as a dwelling;
· a property let with “other land” will only be treated as being let as a separate dwelling if the main purpose of the letting is the provision of a home for the tenant.
“The second point above suggests that most lettings of farms will not fall within these provisions because the main purpose of the letting will not usually be to provide the tenant with a home,” Mark said.
“The provisions will apply to new tenancies starting after October 1, 2015 and in practice these are most likely to be assured or assured shorthold tenancies. However, the provisions of the Act could also apply to new succession protected tenancies under the Rent Act 1977.
“In summary, the changes introduced by these regulations mean that landlords can let a dwelling on an assured shorthold tenancy to a tenant with consent to run a “home business” without any fear that the tenant could, at some later date, seek to claim that they had security of tenure under the Landlord and Tenant Act 1954 by reason of the business use.
“The business definition is, however, broad within the legislation so those who wish to take advantage of the provision are best advised to consider including specific clauses defining what uses are acceptable.
“Rules for matters such as Town and Country Planning or non-domestic rates will also need separate consideration,” he added.
For more information contact Mark Morison, Partner at Berrys, Shrewsbury. Tel: 01743 290647 email firstname.lastname@example.org