Home Working – Some pitfalls for the unwary

The activities of certain high-profile celebrities who have recently been discovered to have business facilities within their homes have brought the whole concept of home working into the spotlight.

From an employer’s point of view, there are major companies who are now quite deliberately encouraging staff to work from home rather than coming into a headquarters building on a regular basis. Hot-desking within the headquarters building for occasional visitors has become much more the order of the day and some companies are funding their staff to set themselves up at home with appropriate internet and computer links, telephone services and so forth while visiting the office only occasionally.

Individuals who run their own businesses have long taken advantage of home working, because it can often avoid the expense and responsibility of taking on a business premises. Many people have a space set up for their business in their home which is incapable of being distinguished from other parts of the home but at the other end of the scale, health professionals for example, frequently set aside specially equipped treatment rooms in their houses for the purposes of their practices.

Home working can involve anything from bringing the odd file or laptop home to working on a regular basis from a dedicated space that has been set aside for the purpose. In assessing the degree to which home working is taking place, one important question is whether the work space has been separated from the rest of the home so that it has ceased to be available for domestic purposes.

Before you go down the home working route, you need to check whether there are covenants on your property against using it for business. If your property is leasehold, it is usual for leases to be fairly prescriptive about the activities that are allowed and a landlord will usually find enforcement fairly easy. Freehold properties can also be subject to restrictive covenants. However, the rules are slightly different. While there may be a covenant that says that business use is not permitted, it does not mean that anyone vaguely interested automatically has the right to enforce it. Covenants set up on an estate management basis can often be enforced by management companies or possibly by neighbours who might be subject to similar restrictions. Rights under such restrictive covenants are not necessarily absolute and, depending on the degree of importance that is attached to the situation, there are procedures in the last resort (though time consuming and expensive) which can sometimes secure the release or modification of the covenants.

Regardless of any covenants, there is always an issue of whether planning consent is required for a change of use or to operate some types of business within the residential area. Anyone who is using the home as a place to work occasionally without changing its character is probably using the home for purposes ancillary to the main use and planning is unlikely to be an issue. If, however, an area of the home has been fitted out exclusively for business purposes, making it unlikely to be used any more as part of the home, that can constitute a change of use that will attract the attention of the local planning authority and could result in enforcement action if planning permission has not been obtained.

Council tax and non-domestic business rates can also impact upon this issue. The whole rating structure of commercial property is different and someone who has set aside a separate area for business purposes may find themselves subject to non-domestic business rates for that part of the property. This can apply to a room within the house that has been set aside or perhaps a purpose-built structure in the garden that is used for a business function.

Another area which can cause problems is refuse collection. If you are using your domestic refuse collection service to take away business rubbish, your local council is entitled to object and insist that you pay for commercial waste disposal.

Many people assume that home working is a minor matter and that no-one is going to find out anyway. It is becoming increasingly apparent that some local authorities are using wide-ranging powers including many intended for anti-terrorism operations to maintain a significant degree of surveillance in their local area specifically to detect activities that are contrary to the normal rules. There is also the position that if neighbours are uncomfortable with your business use, they may well be looking for a means to prevent it by disclosing your activities to the authorities.

Home working can be an enormous boon but it is not worth the stress that can be generated when faced with notices and objections seeking to prevent you continuing with something you have already implemented. It is far better to work through the system and identify the problems and reach a measured solution before embarking on home working generally.


About the author: Roger Smith is a Partner at Barlow Robbins LLP www.barlowrobbins.com

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