Allowing a home business in your rental? What landlords need to know
In New Zealand, it’s not uncommon for many small businesses to be run from home. But if that home is a rental property, there are legal and practical implications for the landlord.
Running a business vs. working from home
Not all home-based work is the same. A tenant who works a few days a week from home is quite different to one running a full-time business from the rental property. For landlords, understanding this difference is essential, as any changes to how the rental property is used could impact your insurance.
For example, an accountant working remotely two days a week won’t have much impact on the rental property. But someone running a hair salon, a baking business, or a car repair service raises the risk of things like fires, damage, and more wear and tear on the property.
Key considerations for landlords
If your tenant has asked to run a small business from your rental property, there are a few important things to consider to help protect both your property and your investment.
- Keep clear, written communication
- Let your insurance provider know
- Check if your tenant is insured.
Keep clear, written communication
Building a good relationship with your tenant helps streamline property management, leading to longer tenancies, fewer issues, and mutual respect. To avoid any disputes, get all the details in writing so you understand what’s involved. Consider updating the tenancy agreement to include clauses about the type of business, any impact on rent, lease terms, and the responsibilities of both you as landlord and your tenant.
Let your insurance provider know
Update your insurance provider with any changes to how the rental property is being used. Landlord insurance is designed to cover risks related to residential use, such as accidental damage, liability or loss of rent. But it’s unlikely to cover risks linked to a business being run from home. Check what your policy includes and whether any changes need to be made to your cover. Keeping your insurer informed helps protect your investment, so you’re not caught out if you need to make a claim.
Check if your tenant is insured
While you can’t legally require your tenants to get insurance, you can strongly encourage it. If they’re running a business from home, having insurance cover for stock, tools, equipment or liability is a smart way for them to protect their business. And it gives you peace of mind too!
Need help with insurance?
If your tenant is running a business from your rental, check you have the right insurance cover. Talk to an insurance specialist today for expert advice and tailored insurance solutions that fit your situation.
