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New exception from protection afforded by Landlord and Tenant Act 1954 11 August 2015

A new exception is to be introduced from the protection afforded by Part 2 of the Landlord and Tenant Act 1954.  We are already familiar with contracted-out leases (in section 38A) and tenancies of six months or less, subject to some important restrictions (section 43(3)).  On a good day we might even remember that mining leases and farm business tenancies are excluded (section 43(1)).  Now we shall have to get used to the exclusion of “home business tenancies”, once the strangely numbered new section 43ZA comes into force.

Section 43ZA will be introduced into the Landlord and Tenant Act 1954 by section 35 Small Business, Enterprise and Employment Act 2015.  Its purpose is to allow people to work from home without creating the statutory protection that applies to business tenants.

The definition of “home business tenancy” is contained in new section 43ZA(2).  It is a letting of a property as a dwelling to one or more individuals, which requires the tenant to occupy the property as a home but also permits the tenant to run a home business from the property (that use of “requires” the tenant to occupy the property as a home is a bit strange – I would have expected “permits”, but I don’t know if the difference is significant).

What is a “home business”?  The definition is simple: “a business of a kind which might reasonably be carried on at home”.  So anything involving IT sounds OK (apart from running a server farm, perhaps), but not steel-making or soft-drink bottling.  Doubtless there will be plenty of marginal occupations, such as car repairs and pet grooming.  Regulations may be made about what is and is not a home business, by the Secretary of State of the Department for Business, Innovation and Skills in England, and the Welsh Government in Wales (so another opportunity for divergence of law between the two countries, as I have previously observed is happening more and more frequently).

There is an important exception from the new exclusion: by section 35(5) Small Business, Enterprise and Employment Act 2015, new section 43ZA will not apply to any tenancy that was already in existence before it is brought into force.  Curiously the exception is contained in the enabling act (the Small Business, Enterprise and Employment Act 2015) rather than in the Landlord and Tenant Act 1954, so it will be easily overlooked once the provision is in force.  This is lousy drafting.  The exception should be in section 43ZA itself.

There is one other change that will be introduced by section 35 Small Business, Enterprise and Employment Act 2015.  Section 23(4) of the 1954 Act already provides that there is no statutory protection where the tenant is carrying on a business in breach of a prohibition of use for business purposes, unless the immediate landlord or his predecessor in title has consented to the breach or acquiesced in it.  For completeness, new section 23(5) will provide that the landlord’s consent or acquiescence to the tenant’s carrying on of a business will not bring the tenancy within the statutory protection where the business that the tenant is carrying on is a “home business”.  It seems to me that this provision is likely to be a great deal more useful for landlords than the new express exclusion to be contained in new section 43ZA.

 

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