Some people who work from home or run a business from their flat or house could face legal action for violating the terms of their property’s lease, according to a legal academic.
During the pandemic the number of people working from home ballooned, and many have continued to operate from their flats and houses after the Covid restrictions were lifted.
Some people keen to use their property for Airbnb rentals have already been warned about the risk of legal action if the lease, which dictates what their home is used for, prevents it.
Now some of those who work for their employer or operate a business from their home – which could include people running a nail bar, music teachers and even builders storing construction supplies – could face legal challenges.
Leases frequently contain restrictive clauses – for example, they may say the property can only be used as a residence for a single family, or it cannot be used to run a business.
Michael Poulsom, a senior lecturer at Manchester Metropolitan University Law School, says it is likely to be only a matter of time before litigation by landlords takes place to halt or restrict the practice.
“In England and Wales, covenants which prohibit the use of residential property ‘for the purposes of a trade or business’, ‘otherwise than as a single private dwelling house’ are very common in both freehold and leasehold titles, and whether working at home breaches those covenants remains in large part unresolved,” he says.
Poulsom estimates that half of the properties in England and Wales could have these restrictive covenants which prevent business use.
“This is of particular concern for leasehold owners, against whom the landlord’s remedy of forfeiting the lease is a possibility.”
While landlords may have ignored people violating the terms of the lease during the pandemic, Poulsom suggests this may now change and prompt legal action.
Breaching the terms of the lease can have serious consequences for the resident. This can start with notice being given, all the way up to court action to forfeit the lease, which effectively means the lease is terminated and the property is lost.
“I think that if you’ve got somebody sitting at a laptop at their kitchen table, doing what they would normally be doing in their office, the chances of the landlord clamping down on that are probably quite slim,” he says.
“Once you get into the situation where people are doing something which is public-facing, with the result that customers start turning up at the property or the amount of traffic in the street increases, the business activity starts to become more visible, more intrusive. I think that is potentially a risk [for legal action].”
Some people looking to buy or use a property as an Airbnb, and who had assumed they could rent it out on a short-term basis, have discovered this is not permitted.
The leases for many flats often contain small print that, for example, might prevent them being let out for periods of less than six months. Renting them out despite these rules raises the risk of legal action. Some will either be unaware of this, or they may decide to go ahead and hope for the best.
In the case of a block of flats, the freeholder may well be represented by a management company. Renting a flat out for a short period could violate clauses which restrict its use to a private residence only.
The best advice in all cases is to check the lease and paperwork very carefully. If necessary, check with the landlord or management company or managing agent, and consider getting some legal advice.
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