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Can a tenant run a business from your investment property?

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A tenant should always seek approval from the landlord before commencing any business activity at a property.

There are many considerations for landlords to acknowledge before allowing a tenant to conduct business from their property:

  • Every council has different regulations, so approval needs to be sought prior to any operations beginning
  • The tenant must have all the relevant licences and registrations required by law and their business must comply with all relevant legislation
  • Some mortgages restrict businesses from operating on the premises
  • Check with your insurance company to ensure that they will be covered and also that your premium and excess will not increase.
  • The tenant should have Public Liability Insurance and provide you with a certificate of currency every time it is renewed.
  • If the tenant is having clients visit the property, parking considerations need to be taken into account as well as, the likelihood of neighbours being disturbed.
  • Also consider if allowing the tenant to run the business from your property, will this increase wear and tear, over and above the level that would be normal for a home?
  • In addition, there will be increased use of water, electricity, internet, phone line, air conditioners, dishwashers, washing machines, dryers etc, depending on the nature of the business.
  • Is the tenant going to have stock stored or delivered to the property? This could have implications for insurance.
  • Any fixtures or fitting installed in order to run the business would need to be removed at the end of the tenancy, at a cost to the tenant.

If you find that a tenant is already running a business from your property and you were not advised, you could issue a breach and there are generally clauses in the Tenancy Agreement that can be cited.

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Marlene F Liontis