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Small Business, Enterprise and Employment Act 2015

New legislation to assist home businesses in Wales.

Sections 35 and 36 of the Small Business, Enterprise and Employment (SBEE) Act 2015 (external link) amend Part 2 of the Landlord and Tenant Act 1954 (Security of tenure for business, professional and other tenants) (external link). Changes came into force in England and Wales on 1 October 2015.

Under Part 2 of the 1954 Act, where there is a business use of a property, a business tenancy exists. As business tenancies afford security of tenure, residential landlords have tended to avoid them in view of the fear that it would prove more difficult to recover the property at the end of the tenancy. Amendments made by the SBEE Act to the 1954 Act mean that home business tenancies are excluded from Part 2 of the 1954 Act.

Home business tenancies are defined as tenancies of dwellings granted to individuals for occupation as homes when tenants, with their landlord’s permission, carry on business of a kind which might reasonably be carried on at home. Landlords will be free to choose what sort of activities to permit in line with the terms of the tenancy. However, the change is intended to remove the previous incentive to bar all forms of business activity.
What is to be regarded as a home business will be obvious in the majority of cases - such as someone running an IT-based company from a spare bedroom. However, where what was formerly a house has been converted, either partially or wholly, into business premises, such as a shop, then this would not be a home business and would not be covered by the new provisions. Similarly, if a premises is used for the supply of alcohol for consumption on licensed premises which form all or part of the dwelling, then the business is not treated as a home business.

The changes are aimed at the private rented sector but may also apply to homes occupied on long leases in the social rented sector.