Things tenants should consider when setting up a side hustle from their rental home

David Joyson, Chief Customer Officer at Homeprotect outlines everything you need to know to avoid eviction when considering embarking on a side hustle from rented accommodation.

Related topics:  Finance,  Landlords,  Tenants
Property | Reporter
12th February 2024
Side Hustle 146

According to recent statistics, more people are renting than ever before, as rising property and mortgage costs price many out of the housing market.

Yet, worryingly, many are in danger of being priced out of the rental market too, with 43% of renters in the UK finding it difficult to afford their rent in 2023.

As tenants struggle to make ends meet, they're likely amongst the masses who’ve started a side hustle or are thinking about starting one to pocket some extra cash to help them stay afloat alongside their full-time job.

But what are the legal requirements for starting a side hustle from rented accommodation? And how can you protect yourself from upsetting your landlord?

The legal rights of renters with a home-based side hustle

You might be aware that online marketplace earnings are now being reported to HMRC to ensure that those earning over the trading allowance pay the right tax. But did you know that if you’re running any sort of secondary business from your home, you may be going against your lease agreement?

Flogging some handmade items or earning money in your spare time from a hobby business might not seem like it would be an issue, but the general guidance is that solely residential properties shouldn't be used for work purposes more than 40% of the time.

While working your office-based job from home is generally deemed ok, running a business is not and according to the Landlord and Tenant Act 1954, landlords could previously refuse requests, however, a more recent Act, the Small Business and Employment Act 2015, dictates that landlords and councils can’t unreasonably deny you permission.

If granted permission, you'll need it in writing, and your lease agreement will need to be changed and re-signed as a ‘home business tenancy’. Failure to do so can result in a breach of your tenancy agreement, which could lead to eviction.

But side hustles sit in the middle of this, particularly if they require activities that can cause more wear and tear, cause a nuisance to neighbours require a significant amount of time or increase energy bills.

So, if you’re thinking of starting a side hustle, here's what you'll need to do to avoid upsetting your landlord:

1: Agree on additional costs

If you're running a side hustle, your utility bills will likely increase. For example, caterers might need additional gas or those with computer-based side hustles like selling clothes or providing tech or virtual content creation or tuition may use extra electricity.

While most renters will cover bills independently from their landlord, those included in your monthly rent will likely see the landlord increase it or ask for an additional payment to cover the additional costs.

Other additional costs might come in the form of business rates (depending on size if it involves customers visiting or property changes).

2: Protect the property and any belongings

It’s important to note that while your landlord is responsible for providing building insurance for their property and contents insurance to cover any furniture they provide, it’s up to you to seek out insurance to cover your belongings.

Running a side hustle from a rented home with a standard home insurance policy could mean your policy is invalid.

You’ll likely need a policy that covers you for home business use if you have business visitors to the property (e.g. if you are tutoring or teaching music from home for example), or if you keep business stock, equipment or tools at the property.

But all policies have different terms and different levels of coverage, so it’s best to check with your insurer if you are starting a side hustle or running any kind of business from home.

Before getting started, ensure your landlord has updated any policies they hold and seek out home business insurance in the form of contents insurance that protects valuables used for your business and public liability insurance that protects you against injuries and property damage claims brought against you by your clients or customers.

If it’s likely to be a time-intensive extra moneymaker, let your insurance provider know about your new home-based side hustle as soon as possible and choose a policy that covers all equipment.

3: Limit nuisance to your neighbours

Running a side hustle will likely mean you’re putting some time in outside of usual work hours - but if your extra work is likely to be noisy or lead to increased footfall to a residential dwelling from customers, clients or deliveries, it could be at risk of disturbing your neighbour’s peace.

Your landlord isn’t likely to thank you if they get notified of disturbances, so be respectful of those living around you by keeping noise to a minimum and limiting deliveries.

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