How Do I Start a Home Business in England and Wales?

Suppose you want to start a home business. A home business can mean different things for different people. Depending on what your intentions are, you may have to take certain steps. This article will help you navigate issues specific to running a business out of your home, such as seeking permission from third parties and obtaining insurance. 

Overview 

You can run a variety of businesses from your home. As a general rule of thumb, the less disruptive your business will be to your neighbours, the easier it will be to run. 

Here are some common examples of businesses that are more or less likely to obtain permission to be run from your home.

Obtaining Landlord Permission

If you are a tenant in a privately let house, meaning you do not rent from your local authority, you must review your tenancy agreement to see if there are any clauses that:

• restrict your ability to work from home; or
• require your landlord’s permission to conduct business from your home. 

If your business only involves “working from home”, such as using the internet to provide a service, it is likely that your landlord cannot unreasonably withhold their consent. However, if your business involves undertaking certain activities that:

• may reasonably lead to increased wear and tear of the property;
• are in breach of the freehold covenants; or 
• require planning permission

then your landlord may have grounds to reasonably withhold consent.

Checking the Freehold and Leasehold Title to Your House for Covenants

Covenants are obligations that exist in the land itself which all occupiers in a premises must follow. Some examples are an obligation:

• not to build any structure taller than 10 metres on the premises; 
• to keep in good repair a boundary fence; and 
• not to engage in any commercial activity from the residence.

Therefore, if you own a leasehold greater than seven years or own the freehold outright, you should review the title to your property to determine if there are any covenants that may prevent you from engaging in certain commercial activities. 

Some land covenants can be as broad as “No commercial activity on the premises”. Others may be more specific, such as all “heirs and assigns shall not at any time use the premises as a public house or beer house or carry on any objectionable trade thereon.”

You should review both the leasehold title and the underlying freehold title as each may have different covenants.

Obsolete Covenants 

If you make an application to the Upper Tribunal (Lands Chamber) to discharge a covenant, a judge may consider it obsolete.

When assessing if a covenant is obsolete, they will assess:

• if the land you occupy has changed in some way since the covenant was created;
• if there have been changes in the neighbourhood’s character; and 
• any other important information. 

Examples of covenants that might impact your ability to start a home business that may be considered obsolete include restrictions on:

• modifying the structure of the land; 
• running any or particular kinds of businesses from the premises; and
• owning livestock. 

Other Ways to Remove Covenants 

Even if the covenant is not obsolete, you can still try and get it removed by identifying who enjoys the benefit covenant. This will usually be a neighbour or, if you own a leasehold, the person that owns the underlying freehold. 

However, it is not always easy to determine who this person is. Therefore, you will need to consult with a property solicitor.

If you can determine who this person is, you may either:

• ask them to agree to discharge the covenant; or 
• pay them. 

Checking With Your Mortgage Company

If you have a mortgage on your freehold or leasehold, you will need to review the terms of the mortgage to determine if there are any restrictions on running a business from your house. 

Seeking Planning Permission 

Depending on the sorts of business activities you intend to conduct from your home, you may need to obtain planning permission from your local authorities. 

You should seek the permission of your local authority if your business will:

• have customers or clients frequently visiting your residence either by foot or by car;
• create noises that may disrupt your neighbors, especially in the evenings and early mornings; 
• create smells or odours; 
• change the character of the neighbourhood; or
• involve a substantial modification of your property, such as building a new structure or altering the front of your house to operate.

Checking With Your Home Insurance Provider

As a matter of principle, if you use your home address as the address of your business, especially if it is the registered address for a limited company, your home insurance provider may deny any future claim if it arises from something you were doing in the course of your business. 

Therefore, you should check with your insurance provider to see what the policy will cover or if the policy provider will revoke your policy if you start your home business. 

Obtaining Additional Insurance 

Finally, most business owners will have insurance policies in place to protect their business and their personal assets. 

You should consider if you may need any of the following types of insurance:

• public liability. This protects any customers or clients visiting your home from any injury they might sustain while on your premises; 
• motor insurance. if you use a vehicle as part of your home business, you should obtain this form of insurance in addition to your car insurance; 
• professional indemnity insurance. if you provide a service such as consulting or psychotherapy, this will protect you from any claim arising from the use of your services; and
• employers’ liability insurance. If you employ anyone. 

Key Takeaways

Starting a home business can be exciting, but before you begin, you should check that you can operate a business from your house. Therefore, you should check with:

• your landlord;
• the title to your leasehold or freehold; 
• your mortgage provider; 
• your local authority; and 
• your insurance providers.

In general, the more disruptive your business is, the harder it may be to start a home business. 

If you need help starting your own home business, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.

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