TECHNOLOGICAL advancements have made it much easier for individuals to run businesses from the comfort of their own homes.
But while the benefits - from less commute time to fewer overheads - are well documented, it's important to be aware of potential legal implications before setting up shop at home.
:: Do you own your home? - Home owners should consider whether they legally own their property. If you rent your home, it is advisable to check your tenancy agreement as it may prohibit the use of the home for business purposes.
:: Are there any restrictive covenants? - A restrictive covenant restricts the use of a home owner’s land and essentially is a binding condition determining what a homeowner can or cannot do with their property. Prohibiting the use of a property for business purposes is a common restrictive covenant found in title deeds. Restrictive covenants are not limited to older properties; they also often affect new build developments. There are ways and means of dealing with restrictive covenants and a home owner should take legal advice before attempting to deal with these issues.
:: What about the neighbours? - On the topic of restrictive covenants, it is common particularly in new build developments for transfer deeds to include provisions which allow neighbours who are subject to similar restrictive covenants to enforce the benefit of those restrictions on other home owners. Your neighbour may well be in their rights therefore to oppose to your home business.
:: What does your mortgage say? - If your property is mortgaged it will likely contain several conditions you must adhere to. These conditions may include a prohibition on using the home for business purposes and you may need consent from your lender to ratify this. Equally, it will be a condition of your mortgage to insure your home so you should ensure that your insurance policy is adequate for your business purposes.
:: Planning permission/building control regulations - A home owner may need to apply for planning permission or building control approvals depending on the extent of their home business. The planning and building control offices will take into account a number of factors including whether any structural changes are made to the property to accommodate the business use.
:: Rates - Using part of a property for business purposes and part for residential purposes may have a knock-on effect on your rates bill and is another factor to take into account when considering setting up a home business.
:: Patricia Arrell (Patricia.Arrell@mmwlegal.com) is a solicitor in the real estate department at Millar McCall Wylie (www.mmwlegal.com).
