What tenants should know before running a business from a rental property
Starting a business from home is a great way to save on the cost of leasing a separate commercial space. But if you’re renting your home, there are a few important considerations.
Working from home vs. running a business
There’s a big difference between occasionally working from home for your employer and running your own business full time from a rental property. If you’re just logging in remotely a few days a week, you probably don’t need to change your insurance or let your landlord know.
But when you run a business from home that involves things like baking or food prep, hairdressing, beauty or massage therapy, pet grooming, a trade or a repair service, there’s a higher risk of fire hazards, property damage, or wear and tear on the property.
In these cases, it’s essential to:
- Get your landlord’s permission
- Understand and follow local council rules
- Check that you have the right insurance.
Disclose business use to your landlord
Before starting any kind of business from your rental property, it is essential that you inform your landlord or property manager. Operating a business without their knowledge or written consent could put you in breach of your tenancy agreement. Carefully review your agreement for any clauses that prohibit business use or home offices and then seek explicit permission. Your landlord may have specific conditions such as insurance requirements, limitations on the type of business, or adjustments to rent. Open and honest communication is key to protecting your tenancy and avoiding serious consequences, such as the property being uninsured due to undeclared business activities.
Understand and follow local council rules
Check your local council’s zoning and land use rules as these could impact how you run your business. Some businesses are not allowed in residential areas and others may need special permits or licenses to operate legally. Council bylaws around noise, parking, signage and health and safety, must also be followed even if you run your business from home.
Check you have the right insurance
Your home and contents insurance is unlikely to cover business-related items like stock, tools or public liability. Likewise, the landlord’s insurance, which covers risks related to renting out the property, won’t protect you or your business if something goes wrong. So, it’s important you’re properly insured with:
- Business contents insurance to cover tools, equipment or stock that are lost or get damaged
- Public liability insurance to cover if customers visit your home and someone is injured, or their property is damaged because of your work
- Business interruption insurance to cover lost income and extra costs if your business is disrupted by unexpected events like a fire or equipment failure
- Car insurance to cover any vehicles used for business purposes should they be involved in an accident, get stolen or be damaged.
Need help with insurance?
If you're not sure what kind of cover your home-based business needs, talk to an insurance adviser. They'll give you expert advice and tailor an insurance solution that protects you and your business, no matter where you work.
