My Lords, I am grateful to the noble Baroness for her amendment and for providing the opportunity to return to the matter of home businesses, and I was very glad to hear of her useful meeting with my noble friend Lord Ahmad. The UK is a great place to start and grow a business. There has been an increase of half a million home businesses in the UK since 2010, with business confidence at record levels. New technology has allowed millions more people to work from home, many creating innovative businesses. Home working allows people to enter the workforce who otherwise might not be able to do so, for example because of family or health constraints. These opportunities should not be limited to home owners, but should also be available to those in rented accommodation.
Part 2 of the Landlord and Tenant Act 1954 gives tenants of premises occupied for any business purposes the right to renew their tenancies. Under the Act, this security of tenure would not apply if the landlord had prohibited business use in any part of the premises. So at the moment, private residential tenancies will commonly include a covenant against any business use to prevent a tenant gaining a security that they would not enjoy under a residential tenancy. The new model tenancy agreement developed by the Government for private landlords has highlighted the need for reform. The clauses before us today simply ensure that a business tenancy is not automatically created should a home business be permitted to operate in residential premises.
The Government have deliberately taken a broad approach to the definition of a home business, but the definition is clear. A home business will be a business run from a home, in a premises let as a dwelling, and a business of a kind that can reasonably be carried on in a home. I understand that the noble Baroness is concerned about the question of what is “reasonable” to be carried on from home. This will depend on the individual
characteristics of the home: its size, its proximity to neighbours and the access to the property, to name but a few. If we attempt to legislate to restrict the definition of a home business and set out a list of the kind that the noble Baroness suggests within this huge variability, we risk restricting a tenant’s entrepreneurship and placing a brake on the growth of this exciting sector.
I know that there are also concerns about potential disturbance, but we are taking these steps because they are sensible, and there are safeguards in place. Planning and environment laws deal with these issues for all properties, owned and rented, and there is no evidence to suggest that these laws are ineffective in dealing with businesses run by home owners. Landlords can still prohibit all or any business use and are free to set the terms of the lease and limit the noise level, as now. Covenants in existing leasehold agreements remain in place, and taxes and building regulations remain unchanged. It would surely be unfair for the law to restrict a tenant’s home business opportunity more than a home owner’s.
With the second part of the amendment, I recognise that the noble Baroness is trying to provide clarity for landlord and tenant, but these clauses already include a definition of a home business, and I fear that her amendment could have perverse consequences. Our clause already allows landlords and tenants to use the tenancy agreement to permit a home business that fits that definition. The noble Baroness’s amendment goes further than this by allowing the landlord and tenant to define a home business themselves. This could allow the landlord to avoid security for business tenancies such as those for shops, which rely on this protection to build and develop their businesses. I am sure that this is not the noble Baroness’s intention for the amendment to add more uncertainty and risk for the tenant.
This clause should not be a vehicle for landlords to remove security of tenure from business tenancies. It would be much harder to broaden the scope of these provisions later to encompass new types of business than to narrow or refine them through secondary legislation. We have included within the clause the power to make secondary legislation which could further limit the scope of a home business, and I assure the noble Baroness that the Government will keep this under review.
Since the 1954 Act, the world of work has changed. We need to make changes to ensure that the Act is not stifling tenants’ innovation. We do not think it is for government to limit the business activity people can carry out in their homes, so long as it is not causing adverse impact on the landlord or neighbours. Existing protections are in place to guard against any adverse impact to others. Why should privately renting tenants be treated any differently from home owners who run businesses from their homes?
I greatly appreciate the work of the noble Baroness to scrutinise this provision, but there is little more that I can say. I hope that the reassurance I have given her today in this House and the discussions that she has had with my noble friend Lord Ahmad will mean that she feels able to withdraw her amendment.