Landlord could be liable to a lifetime tenancy if a tenant is carrying out a home based business?

by Readers Question

11:21 AM, 18th October 2016
About 2 years ago

Landlord could be liable to a lifetime tenancy if a tenant is carrying out a home based business?

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Landlord could be liable to a lifetime tenancy if a tenant is carrying out a home based business?

I discovered that if you rent your property and the tenant is running a legitimate small business from there (with or without your permission) like a hairdresser or architects practice from the bedroom converted to small office the tenant can obtain a life time tenancy.home business

The rules are something to do with the landlord and tenant act 1954 and that businesses are allowed lifetime tenancies so if they do a business on a residential AST even though the residential tenancy says they can’t, the landlord can be held liable to the lifetime tenancy. All AST’s before Oct 2015 allow the tenants this right but new AST’s after this date cover homeworkers/home based businesses and therefore the landlord is protected from the lifetime tenancy issue.

So my question is does anyone know of any strategies as to what to do if one gets into this awful situation, are there anyways out? Plus if a lifetime tenancy is granted, will the rent be fixed or capped at that rate forever?

Also what happens with the buy to let insurance policy, do they cover tenants who run a business from home like a mother who runs a hairdresser just seeing maybe 2 or 3 clients a day? Obviously there will be a breach of mortgage conditions, but I’m not too worried about that part just now.

Any advice would be appreciated.

Joel



Comments

Jason McClean

11:32 AM, 18th October 2016
About 2 years ago

Hi Joel

From an insurance point of view you need to disclose as much as possible when getting a quote, so tell the insurer about the tenant and their business. The tenant should have Public Liability Insurance in place but you may want to buy that to cover yourself as well.

There is insurance readily available for you as a landlord for this. Don't try to hide the business though, if you ever made a claim that could give cause to refuse payment if not disclosed.

Hope this helps!

Jason

Romain Garcin

12:12 PM, 18th October 2016
About 2 years ago

"The rules are something to do with the landlord and tenant act 1954 and that businesses are allowed lifetime tenancies so if they do a business on a residential AST even though the residential tenancy says they can’t"

If the tenants runs a business in breach of the tenancy then the whole relevant part of the Landlord and Tenant Act 1954 does not apply.

Joel Hearne

12:25 PM, 18th October 2016
About 2 years ago

Reply to the comment left by "Jason McClean" at "18/10/2016 - 11:32":

Thanks for the advice Jason from the insurance angle, much appreciated.

Do you have any ideas on the lifetime tenancy part? I am sure there must be many landlords who turn a blind eye to home based business like tenants who eBay items, trade stocks , beauty treatments etc from the property who now have a tenant that is making a life time tenancy claim because the landlord informally allowed them to run a business?

Anyone know a way out of the lifetime tenancy please?

Thanks

Luke P

12:27 PM, 18th October 2016
About 2 years ago

Reply to the comment left by "Joel Hearne" at "18/10/2016 - 12:25":

Could you post the specific section of the legislation?

Whiteskifreak Surrey

12:29 PM, 18th October 2016
About 2 years ago

Would that apply to a lodger who runs a small consultancy business from a room he rents from living-in Landlords?

Joel Hearne

12:40 PM, 18th October 2016
About 2 years ago

Reply to the comment left by "Romain Garcin" at "18/10/2016 - 12:12":

What happens if you informally agreed to say to a tenant family that their wife could run a beauty business but nothing written in an AST, you just texted or emailed to say that's fine because you kind of figured it was no big deal, just a few hours working on the side a month treating few family members and friends and now they are after a life time tenancy because a lawyer have advised them of this ?

What does a life time tenancy entail? Can a landlord raise the rent, what strategies would be in place to remove the tenant from a life time tenancy that would be legal but just unpleasant, ie raising the rent or seeking possession to run the business yourself in that property?

Thanks

Joel Hearne

12:55 PM, 18th October 2016
About 2 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "18/10/2016 - 12:29":

hi, if he has an AST tenancy then yes I believe so

Neal Craven

12:56 PM, 18th October 2016
About 2 years ago

http://www.publications.parliament.uk/pa/cm200203/cmselect/cmdereg/182/18205.htm says “The Act applies to tenancies where the property is occupied by the tenant for business purposes. "Business" is widely defined to include a trade or profession, and "any activity carried on by a body of persons, whether corporate or unincorporate."[6] To qualify for protection, the tenant need not occupy the whole of the premises, nor does he have to use the premises exclusively for business purposes.”

A business tenancy with the protection of the act, it isn’t a life time tenancy it can be renewed or in some circumstances ended on between 6 and 12 months’ notice. I don’t know if this is still the case if the occupation is unauthorised.

Joel Hearne

13:03 PM, 18th October 2016
About 2 years ago

Reply to the comment left by "Luke P" at "18/10/2016 - 12:27":

http://www.legislation.gov.uk/ukpga/2015/26/section/35/enacted

Also just google "part 2 of the landlord and tenant act 1954 and life time tenancy", plenty of material to concern will come up and with good reason too. If you got a tenant legally after a life time tenancy because you may have said informally "yes" to a little on the side harmless ebay business or beauty business is definitely worrying.

Whiteskifreak Surrey

13:04 PM, 18th October 2016
About 2 years ago

Reply to the comment left by "Joel Hearne" at "18/10/2016 - 12:55":

Thank you Joel,
AST normally does not apply to a lodger if he rents out a room in the house occupied also by the Landlord. A lodger has a normal tenancy agreement, not assured one. This is also as Government recommends
I think in the circumstances it would be safer to just get rid of such tenant and get someone who is an employee, not self employed. That provision is probably not widely known (yet).

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