How to Deal With a Tenant Running a Business From the Property
A childminder, hairdresser or e-commerce stock room can shift your AST out of the Housing Act 1988 — and your mortgage out of compliance. Here's where to draw the line.
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Introduction
The rise of home working has made 'business use' the most-asked question in landlord forums. The legal position is more nuanced than landlords think — and refusing a perfectly legitimate request can cost you in damages. Here's where the lines actually sit.
The 'home business' definition
Small Business Enterprise & Employment Act 2015 (Home Business Tenancies Order 2015): a business carried on mainly from a dwelling-house, run by a person who occupies the dwelling, that would not reasonably be expected to cause nuisance. Examples: freelance design, virtual consulting, online retail dispatch, tutoring.
What requires consent
Even compliant home businesses need written landlord consent under most ASTs. Consent cannot be unreasonably refused. Reasonable refusal grounds: lease prohibition (leasehold flats), insurance impact, mortgage prohibition, visible customer traffic, signage in residential street.
Childminders — special status
Registered childminders are explicitly protected by the Children & Families Act 2014. Landlords cannot unreasonably refuse. Tenant must be Ofsted-registered. Liability insurance shifts to childminder. Inform your insurer in writing; most BTL policies handle this without premium increase.
Commercial-only use — different law
If the property is used wholly as business premises (e.g. converted to a salon), it's no longer 'mainly' residential. Tenancy becomes a business tenancy under the Landlord & Tenant Act 1954 — security of tenure for 14 years, fixed renewal rights, very different exit. Avoid entirely.
Mortgage and insurance
Standard BTL mortgages prohibit non-residential use. Most lenders waive for home business on request. Standard landlord insurance excludes business use; many policies allow 'occasional' home business but require notification. Always inform both — silently approved use is silently uninsured.
Council tax and business rates
Home business doesn't usually trigger business rates if the property remains primarily residential. Hairdressing rooms, dedicated workshops or warehousing can flip the council's view — VOA can split the property and apply business rates. Tenant pays, but it complicates re-letting.
Planning permission
Use Class C3 (dwelling) generally allows ancillary home working. Customer visits, deliveries, signage, employees on-site can trigger 'material change of use' requiring planning consent. Council enforcement is rare for typical home business; aggressive for visible commercial activity.
Practical consent letter
Write: 'I consent to your operating [business] from the property on these conditions: no customer visits / no signage / no employees on site / insurance maintained / business ceases on tenancy end. Consent revocable on 4 weeks' written notice for breach.' Saves arguments and protects all parties.
Final word
Smart Sleep Property handles the heavy lifting — referencing, compliance, deposits, repairs, and full tenancy management across Norwich and Norfolk. Get in touch if you'd like us to handle this for you.
Frequently asked questions
What is the key rule for tenant business from rental?+
The Small Business Enterprise & Employment Act 2015 lets ASTs continue where tenants run a 'home business' (Order 2015) — defined as a business carried on mainly at home, that wouldn't cause nuisance to neighbours. Childminders are explicitly covered. Commercial-only use (e.g. taxi rank, hairdressin
Does this apply across England?+
Yes — this guide covers England. Scotland, Wales and Northern Ireland have separate but broadly similar regimes.
Where can I get help?+
Smart Sleep Property offers compliance support, document templates and full management for Norwich and Norfolk landlords.
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