Homework, written on a blackboard.

Rapid advancements in web development and technological progress in computer hardware and memory capacity has allowed a wide variety of businesses to save money and adopt flexible working practices by having their employees work from home. Office accommodation is no longer needed by a very significant number of businesses.

The employees or owners of such businesses who work from rented accommodation will, in the vast majority of cases, be doing so in breach of the terms of their residential tenancies. As a standard practice, residential tenancy agreements will usually prohibit business use so as to prevent tenants arguing that they have the benefit of protected business tenancies[1], which carry with them certain rights including an automatic right of renewal. Such a prohibition puts the homeworkers in breach of their tenancy agreements.

The fact that modern working practises and traditional residential tenancy terms are at odds with one another has been addressed by legislation which was brought into effect on 1 October 2015 [2].

The Small Business Enterprise and Employment Bill was announced during the Queen’s Speech on 4 June 2014 and gained Royal Assent on 26 March 2015. The Act is designed to reduce the barriers that many small businesses face as they seek to innovate, grow and compete. The Act covers a wide range of topics to include finance, public sector procurement, insolvency and corporate transparency.

In particular, effective from 1 October 2015, the Act allows a tenant to work from home with his or her landlord’s consent without creating a protected business tenancy.

This change means that residential tenancies will no longer need to prohibit business use. It reconciles the need to facilitate home working on the one hand and preventing the creation of protected business tenancies on the other.

Home working is an important component of the modern British economy and can now take place in rented accommodation without the threat of eviction.

The usual restriction on business use is no longer necessary, but may still appear in landlord’s standard letting documents. Tenants who anticipate that they may wish to work from home should ensure that any tenancy agreement entered into going forward does not include the prohibition.

This post was edited by Iain Davies. For more information, email blogs@gateleyplc.com.

[1] Under the Landlord and Tenant Act 1954

[2] The Small Business, Enterprise and Employment Act 2015 (Commencement No.2 and Transitional Provisions) Regulations 2015 (SI 2015/1689)

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.