First Step Marketing

Planning permission

The first area to consider is planning permission. The planning legislation basically divides properties into those which can be used for commercial purposes, and those which are purely domestic. Planning authorities are obliged to prevent residential areas being infiltrated by offices and factories, and so legislation ensures that a house which has been used for domestic purposes cannot be used for commercial gain without planning permission. In most cases such permission will not be given, simply because the local authority’s aim is to keep areas of housing and business as separate as possible.

If you intend using your home for business purposes you could fall foul of this area of legislation. Without planning permission, the authorities could obtain a court injunction restraining you from carrying out your business from home. However, it is still possible to work from home without contravening the planning legislation. The Government has relaxed the rules somewhat, since it is encduraging more and more people to start small businesses. Consequently planning permission is not needed if your business will not ‘materially change the use’ of any part of your home, but this definition is open to interpretation, and various local authorities construe it differently.

Generally, you will not need planning permission if you do not alter the structure of your home, and if the rooms you use for your business are still largely available for ordinary domestic functions. If you use a spare bedroom as an office but can still use it as a guest room as well you will not have ‘materially changed’ the use of the room, so planning permission would not be required. However, check with the local planning authority before starting work. Each area of the country is different, and there may also be local bye-laws applying which affect the use of your premises for business purposes. 

If you do need planning permission, you will have to get a change of use certificate. These are difficult to obtain in residential areas and you may well find it easier to abandon your ideas for a home-based business and look for business premises.

Landlords

If you rent your home your landlord may object to you using his building as a base for your business. If you don’t check this out, and start your business regardless, you may ultimately find yourself evicted for being in breach of your contract with your landlord. Council tenants must also check with their local authority that they will not break any rules by working at home.

Property deeds

If you own your own home the deeds of the house may contain paragraphs relating to its possible business use. Often when large estates are built the developers include covenants or clauses in the deeds forbidding the use of the dwellings for any kind of business purpose. This is to help ensure that the area remains primarily residential. If this is so in your case, obtain legal advice on whether or not to proceed.

You may find that running a business from home against the written word of the property deeds is not a problem unless your neighbours complain. They might then be able to obtain an injunction against you to stop working in contravention of the property deeds. Few neighbours would take this step if your business was not troublesome or causing problems in the area. However, if you plan to operate a noisy motorcycle manufacturing plant in the garage, you could end up in trouble! Whatever you plan to do from home get a solicitor to check your property deeds so that you know of any risks you may be taking.

Mortgage companies

 Virtually every mortgage agreement contains a clause relating to the business use of the premises. Mortgage companies will not lend you money to buy a house if you then use it as a base for commercial gain. They, like planning authorities, clearly distinguish between residential and business properties and argue that if you want to run a business from a house you require a commercial property loan and not a domestic mortgage.

Fortunately, most mortgage companies are prepared to bend the rules slightly providing you can establish that you are not changing the basic use of the premises. If your home is still to be used mainly for residential purposes, the mortgage company is likely to continue your mortgage on the existing basis. However, if you plan to convert all of the bedrooms into a mini-factory, the company is unlikely to turn a blind eye! Check your mortgage documents to find out whether or not you are going to breach any clauses of the contract. If the contract does forbid the business use of the premises get advice from your solicitor as to how to proceed. However, the fact that an estimated two million people already work from their own home, is testimony to the flexibility that exists.

 Insurance

Working from home will almost certainly affect the type of policy which covers your house, and now might be a good time to inform your insurance company. Find out what sort of deal they offer, but don’t commit yourself to their policy simply because you’ve used them before — it pays to shop around first!

Possibly related posts: (automatically generated)
Analyzing Your Home Business Base continued

This entry was posted on Thursday, September 3rd, 2009 at 2:43 am and is filed under Corporation Law, Home Based Business, Legal. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.