New home business tenancy rules on lettings

The provision means that tenants who have established a home business use within a dwelling house with the landlord's consent will not be able to claim security of tenure under the 1954 Act.

The new provisions are introduced by the Small Business, Enterprise and Employment Act 2015. The act introduces the exclusion to tenancies of separate dwellings to individuals where the terms of the tenancy:

• Require the tenant to occupy the dwelling-house as a home

• Permit a home business to be carried on in the dwelling-house or permit the landlord to give consent for a home business to be carried on in the dwelling-house

• Do not permit a business other than a home business in the dwelling-house.

• The property must also be:

• A property let for mixed residential and business use is capable of being let as a dwelling

• A property let with “other land” will only be treated as being let as a separate dwelling if the main purpose of the letting is the provision of a home for the tenant.

The second point above suggests that most lettings of farms will not fall within these provisions because the main purpose of the letting will not usually be to provide the tenant with a home. The provisions will apply to new tenancies starting after October 1, 2015 and in practice these are most likely to be assured or assured shorthold tenancies. However, the provisions of the act could also apply to new succession protected tenancies under the Rent Act 1977.

In summary, the changes introduced by these regulations mean that landlords can let a dwelling on an assured shorthold tenancy to a tenant to run a home business without any fear that the tenant could seek to claim that they had security of tenure under the Landlord and Tenant Act 1954.

* Mark Morison is a partner at Berrys, Shrewsbury