My Lords, Amendment 33BH stands in my name and that of my noble friend Lord Stevenson. It deals with the issue of so-called home businesses that take place in rented or leased homes.
At present, landlords who let residential property to tenants who also use their homes for business run the risk of their tenants claiming security of tenure as business tenants under Part II of the Landlord and Tenant Act 1954. To protect themselves from this, landlords usually prohibit any use of the residence for business in the tenancy agreement. However, should the landlord in some way acquiesce to such businesses, the tenant gets security under the 1954 Act, notwithstanding the wording of the agreement. That is why the Government have included Clause 35 in the Bill, which will allow that, where a home business is carried on by a tenant, it should not qualify for security of tenure under the 1954 Act. Landlords could thus accept some working at home by tenants without risking losing control of their property—the tenants having only normal residential security of tenure. Secondly, where a tenant carries on a home business in breach of any prohibition against business use and the landlord gets to know about it—and thus at the moment is seen effectively to acquiesce to it—the Bill as drafted would not give the tenant statutory rights.
The clause seems sensible but my first question is: why is the measure in the Bill? Although we support its intention, we are unaware of any problems, debate or any evidence that led to its inclusion. Helpful though Clause 36 may be, will the Minister outline a little more of the background? We doubt whether it will have much impact, but that is no reason for us to oppose its inclusion. We welcome what it could do but we have questions about the wording, hence the amendment.
The most obvious, indeed crucial question is: what is a home business? The definition in the Bill, which has been described by my noble and learned friends as hopelessly wide, states:
“A home business is a business of a kind which might reasonably be carried on at home”.
I kid you not. That is what the Bill says.
That is fraught with uncertainty. Whether a tenant’s business is one which can reasonably be carried on at home will depend on a great number of variables. Indeed, there is an almost infinite range of businesses which householders carry on at home at present. Probably all of us over the weekend were doing a bit of office work at home. I am excluding civil servants from that; I would hope they had a good weekend off. We have catering, music teachers, tutors, web design, computer programming, craft work, repairing and restoring anything from machinery and vehicles to furniture, books, TVs or musical instruments, hairdressing, jewellery-making, secretarial services, fine art or even Barbara Hepworth’s wonderful sculptures, journalism, charity work, medical, counselling, physical fitness training, accountancy, legal advice, or, to return to the Consumer Rights Bill, dress-making. I know that the Minister understands my particular interest in that.
Whether all of those can reasonably be carried on at home depends on the home. What can be done in the back yard of a remote cottage is rather different from what can reasonably be carried out in a flat on the third floor. So, to assist the courts, and to provide some certainty for landlords and tenants alike, the test of “reasonableness” needs fleshing out. Presumably it must be reasonable from the point of view of the premises—something which is sufficiently close to activities which householders might carry out on their own account, such as sewing, studying, reading, writing, cooking, handicrafts, gardening, DIY, and so on may not seriously impact on the fabric, condition or layout of the premises. Nevertheless, there could be environmental considerations.
Is it reasonable to receive deliveries, customers, clients, patients or students, or to carry out noisy activities when you live in close quarters with your neighbours? Will the business generate an excessive amount of traffic on the roads, creating congestion or parking problems? That will be particularly the case where the Bill will now deny statutory rights to businesses in which the landlord has acquiesced, since there will not be an earlier agreement between the landlord and the tenant over whether what the tenant is doing at home is indeed a home business, given that there is no independent definition of that.
It is for that reason that the first part of our amendment seeks to suggest the factors that the court should take into account—and therefore factors that the landlord and tenant need to be aware of when the court is deciding what can reasonably be described as a home business. The second part would specifically allow a landlord and a tenant to contract out of the Landlord and Tenant Act 1954, probably providing that they notify the court, as has been possible since the 1970s under some other circumstances.
The success of this probably desirable measure will depend on how any definition is received in the real world, and whether there is sufficient clarity or guidelines to enable both parties—the landlord and the tenant—to know where the statutory rights will fall. The amendment attempts to identify a way forward to provide the clarity needed for the measure to have effect that I assume the Government desire. I beg to move.
6.15 pm