Running a business from home: Council rules in the UK

Running a business from home? Council rules in the UK, legal requirements, planning permissions, and insurance are all important considerations.

There are an estimated 2.9 million home-based businesses in the UK, contributing a whopping £300 billion in annual turnover to the economy. If you’re considering joining them, you’ll need to look into a couple of things first.

Here, we explore the ins and outs of running a business from home.

Let’s dive in.

Can you run a business from home?

Yes, it’s absolutely possible (and legal) to run a business from the comfort of your home — it simply depends on the kind of business you want to start and the type of property you live in.

Generally speaking, you need to ensure that you have permission (if required) to run your business from home, that your work is safe, and that it doesn’t disturb your neighbours.

For example, a small, web-based business where you mostly work on a laptop or computer probably won’t need special permissions or cause neighbourly disputes. However, a company where customers or suppliers come and go from your residential property, or one that requires heavy machinery or commercial vehicles, may not be appropriate as a home-based business.

Let’s take a look at the different living situations and how they relate to running a business from home:

• Can you run your own business from a council house?
• Can you run a business from a rental property?
• Can you run a business from a mortgaged property?
• Can you run a business from your garage, shed, or garden office?

Can you run your own business from a council house?

Yes, you can run a business from a council house or flat, but you’ll need written permission from your local council or housing authority first.

Before you start advertising your services and taking on clients, it’s a good idea to do the following:

• Contact your council or housing association and ask if there are any special requirements for running your business from your council house. You can find your local council by entering your postcode on the uk website.
• Check your tenancy agreement for anything that might prevent you from running a business from your council house (e.g., a clause about disturbing neighbours or antisocial behaviour).

In most cases, you’ll meet the running a business from home council rules if you show consideration to your neighbours, don’t damage or alter the property, don’t put up advertisements, and people don’t come and go at all hours.

However, every council and housing association is different, and council house-based businesses are usually considered individually.

Can you run a business from a rental property?

Yes, you can run a business from a rented house or flat. However, you’ll need permission — this time from your landlord. You should also check your tenancy agreement for specific wording about running a business.

If your landlord gives you written permission, you should request that your tenancy agreement be updated to reflect this.

While your landlord can’t unreasonably withhold or delay permitting you from running a business in the property, they can refuse on certain grounds. For example, if they believe your business activities will cause significant wear and tear to the property or be a nuisance to tenants and neighbours.

You should also consider whether you want to use the rental property’s address as your business address — especially if you’re on a short-term lease. Registering your business at another address could save you some extra admin if you move further down the line. Check the rules for registered office addresses here.

Can you run a business from a mortgaged property?

Yes, running a business from a property you own is possible. However, there are a couple of things you’ll need to check before you get started:

1. The terms of your mortgage: If you’re still repaying your home loan, you may need permission from your mortgage lender before starting a business. Some residential mortgages won’t let you use the property for business purposes, and if you breach the loan terms, you may need to repay the full amount or risk having your home repossessed.
2. The property deeds: There may be legal restrictions (otherwise known as “restrictive covenants”) in your deeds prohibiting you from running a business from your property. Your solicitor should have provided these documents when you bought the property, or you can get a copy from the Land Registry.

Even if you have your lender’s permission and no other restrictions stop you from running your business, you must still consider your neighbours. For example, excessive noise or customers taking up the extra parking spaces around your property could lead to disputes. This may come into play down the line: you’re legally required to declare neighbourly disputes if you put your house up for sale.

Can you run a business from your garage, shed, or garden office?

Yes, you can run a business from a building on your property, such as a shed, garage, or garden office. Once again, you’ll need permission from your landlord or local council if you’re renting, and you must consider how your business will impact your neighbours.

Are there any other rules about running a business from home?

Depending on how much of your home is used exclusively for business, you may have to pay business rates (a tax levied on business properties) in addition to council tax.

According to the government, you may need to pay business rates if:

• Your property is part-business, part-domestic (e.g., you live above your shop)
• You sell goods or services to people who visit your property
• You employ other people to work from your property
• You’ve made changes to your home for business purposes (e.g., you’ve converted your garage into a hairdresser’s studio)

If you’re in England or Wales, contact the Valuation Office Agency (VOA) to determine if you need to pay business rates. In Scotland, contact your local assessor. In Northern Ireland, contact Land & Property Services.

Do you need planning permission to run a business from your home?

If your business idea requires you to make changes to your home, you may need planning permission.

For example, if you need an extension to your property to start a daycare or pet boarding business, you should contact your local planning authority via your local council to find out if your project needs permission first.

Read more: Do I need planning permission? (Your complete guide)

What insurance do you need to run a business from home?

If you employ staff to work in your home-based business (even if it’s only one person), the only insurance you’re legally required to have is employer’s liability insurance. This policy covers you for compensation costs generated by your employees.

Other types of business insurance you may want to consider include:

• Public liability insurance: If your business puts you in direct contact with third parties (clients, contractors, or a member of the public), public liability insurance can protect you if they feel like they have suffered a loss or personal injury due to your lack of care and decide to sue you.
• Professional indemnity insurance: If your home-based business offers advice to clients, professional indemnity insurance can protect you if a mistake or negligence on your part results in financial loss.
• Product liability insurance: If your business designs, manufactures, or supplies a physical product that is sold or given away for free, product liability insurance protects you against the cost of compensation for personal injuries or loss of or damage to property caused by a defective product.

Are you looking for insurance cover to support your business? Get in touch with us! A member of the Howden team would love to help you find the perfect policy!

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Home-based business FAQs

Do I need a licence for my home-based business?

You don’t need a special licence to run a business from your home, but some business types do require you to be licenced before you can start offering services to customers. These include:

• Childcare
• Dog breeding
• Ear piercing
• Importing and exporting goods
• Loans and financial services

Is it illegal to run a business from home in the UK?

No, it’s not illegal to operate a business from home in the UK.

As we’ve discovered above, as long as you have the appropriate permission, pay the necessary business rates, don’t cause a nuisance to your neighbours, and don’t produce hazardous waste or excessive noise, you should be able to run a home-based business.

Can you report someone for running a business from their home?

Yes, you can report someone running a business from their home to your local council.

Your council may take action if:

• The property is no longer being used as a private home
• There’s a significant rise in traffic or people visiting the house
• The business disturbs neighbours at unreasonable hours
• The business creates excessive noise or unpleasant smells

However, they’re unlikely to act if the property is still mainly used as a home or if the business is low-key and reasonable (e.g., a bedroom used as an office for a web-based business).

In summary: Running a business from home legal requirements

To recap, you can run a business from home in the UK, but depending on the type of property you live in and the kind of business you want to start, you may need permission first.

You should also consider taking out business insurance to protect your home-based business against the unexpected.

Also read:

• Types of business insurance you should know about
• What is public liability insurance? (Full guide)
• How to go self-employed: Your complete guide
• READ MORE BUSINESS INSURANCE GUIDES