Many Tenants think that they can run a business from home, without consequence, such as hairdressing, massage, beauty services, day-care, tutoring, music lessons, an eBay store, or even an AirBnB. The Tenant should always seek approval from the Landlord prior to commencing any business activities at a property.
For the Landlord, there are many factors that need to be considered prior to allowing a Tenant to conduct a business from a property.
- Every council has different regulations, so approval must be sought to comply with any relevant laws and local government regulations prior to operations beginning
- The Tenant will need to ensure that they have all relevant licences and registrations as required by law, and the business will need to comply with all relevant legislation
- Some mortgages prohibit business being conducted on the premises
- The Landlord will need to check with their insurance company to ensure that they will be covered if the Tenant has a home business, and also that their premium or excesses will not increase
- The Tenant should also have a Public Liability Insurance Policy appropriate to the type of business, and provide a copy of the Certificate of Currency to the Landlord, along with each subsequent renewal
- If the Tenant will be having their Clients visit the property, consideration should be made for the amount of street parking available, and also whether the neighbours will be disturbed by people coming and going at the property
- The Landlord will also need to consider if running a business from the property would increase the wear and tear at the property, over and above the level that would be normal for a home
- Increased usage of water, electricity, internet, phone line etc should be considered, as well as the possible constant running of air conditioners, dishwashers, washing machines, dryers etc, depending on the nature of the business
- Will the Tenant have stock delivered to, or stored in the property – this may also affect insurance
- Any fixtures or fittings that may need to be installed in order to run the business would need to be removed at the Tenants cost at the end of the Tenancy
If the Tenant is already running a business at the property, and the Landlord was unaware of this, the Tenant could be issued a breach, and there are generally clauses in the Tenancy Agreement which can be used. For example Tenants use of premises, number of occupants at the premises, not using the premises for an illegal purpose, interfering with the peace, comfort or privacy of a neighbour, and also increasing the Landlords insurance premium or causing it to become invalid.
All in all, there are many considerations which should not be taken lightly by the Landlord if the Tenant wishes to conduct a business from a rental property.
Source: Nicole Garnham, Real Estate Dynamics 2016