Member Article

Planning to run a business from home?

If you are a tenant planning to run a business from your home, it really is essential to consult a lawyer first. In a case on point comments Sundeep Bilkhu, Property Lawyer at Sydney Mitchell soliditors; a woman who operated a child-minding enterprise in her flat found herself in unwitting breach of her lease and at risk of losing the roof over her head.

The woman held a 999-year lease on an apartment which formed part of a small purpose-built development of 18 flats. She was registered as a child-minder with Ofsted and advertised her services via the local authority. Authorised to look after up to six children at a time, she relied on child-minding for her entire income.

Her lease, however, included a clause that banned use of the flat for any trade, manufacture or business. The freeholder of the development – a company owned by residents – complained to the First-tier Tribunal (FTT) that the woman’s child-minding use of the premises breached that provision.

Insisting that she was not running a business, she pointed out that planning consent was not required for child-minding in a domestic context, nor was she required to pay business rates. Her mortgage lender did not view the flat as business premises and she was not entitled to treat interest payable as a business expense. She denied that she was causing a nuisance to anyone and stated that she would never have bought the flat had she known she could not use it for child-minding purposes.

In upholding the freeholder’s complaint, however, the FTT found it impossible to view the child-minding operation as anything other than a business, within the meaning of the lease. Although the woman had been using the flat for child-minding for some years, the freeholder had neither explicitly nor impliedly waived the strict prohibition on business use. The FTT’s ruling opened the way for the freeholder to seek forfeiture of the woman’s lease.

This was posted in Bdaily's Members' News section by Sydney Mitchell LLP .