Can my tenant run a business from my property?

Question

Answer

You are certainly not alone in this issue, working from home is becoming increasingly popular, so more and more landlords are having to consider the possibility that their tenants may be using their properties as a working space as well as a home. In fact, if you are able to advertise potential working space in your property, you may find that it is snapped up even quicker!

If you have a mortgage on your property, you should check with both your mortgage and insurance providers that these changes won’t affect your policies and be aware that bringing a business into the premises may have a significant effect on your mortgage premium. If this is the case, make sure the rental income covers the increase in mortgage payments, as you don't want your tenant’s business to cost you money! Also, make sure that your potential tenant has the relevant insurances for the business. It is standard practice for most landlords to insist on evidence of tenant's holding contents insurance before they move in, but don't forget that if there is expensive business equipment being stored within your property, it should be properly insured, possibly on a separate policy to general contents.

If your property is a flat, your leasehold contract may dictate that you are not allowed to run a business from the property. In which case, you need to communicate this to the prospective tenant.

In your situation, you should certainly ask what sort of business your tenant is planning to run. If they are just planning to use a laptop on the kitchen table, you shouldn’t have too many issues, but if there are any physical changes needed to be made to the property, maybe consider the impact this could have on your investment. Also, you should have a think about the logistics of running a business from a residential property. Consider the impact that it could have on the neighbours for example - with changes to footfall, parking and strangers accessing the property (if this is likely to be an issue).
Ultimately, you need to be comfortable with the idea of your property being used as a base for a business. If you are not, you should make this clear to the prospective tenant and go your separate ways. If you are happy with the idea, make sure that you have covered your bases and are checked that you are not at risk.