I’ve got a tenant moving into a house I own in Annandale, Sydney. I met him this morning when I was there getting some repairs done and he mentioned in passing that he was going to be running his design company from the house. There will be 3 employees.
This took me by surprise and he didn’t mention this to the managing agent, either. My call to them was the first they had heard of it. They’re pretty annoyed.
They’re a good agent and they’ll be doing an inspection every 3 months, so I’ll know if the place is getting knocked around.
I’ve got standard landlord’s insurance with Public Liability. Is there anything else I need, or need to be wary of?
The tenant is moving in tomorrow, so it’s too late to stop it happening.
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auGee that’s a nice surprise. There is probably something in the lease saying they cannot run a business from your property without your permission. But it shouldn’t be too much of a problem, unless a customer trips etc on something and it ends up being the landlord fault. Better check your insurance policy to see if it covers a business (and its customers) being run from the house.
Terryw
Discover Home Loans
Mortgage Broker
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Scott
My initial thoughts are that will the council allow him to run a business from home.
Some councils have regulations that say you can run a business from home provided you meet certain criteria.
One of these criteria is the number of people you employ cannot be greater than a certain number – 1 rings a bell.
Therefore, your risk is that the council stops him operating from your house. If he stops using the house and moves elsewhere, you want to be certain that he will still honour his lease, especially if you haven’t found a tenant.
Secondly, be aware of the “changes” he might make to the property for computers etc in every room. Maybe a clause to make good the property of your permission if he wants to do certain things.
Thirdly, 3 employees will all require car parking spots (probably) and this may upset the nighbours if the property is not designed for this.
However, after saying all that, if he is a good tenant, you might find that he is there for a while and will improve the value of your property.
Good luck
Dave
I use two premisis for my business – my commercial and a home office – the reason we have a commercial is because (as was mentioned before) a lot of councils don’t want residences used as businesses. Whether the tennant gets away with it will probably come down to if he has any drive up traffic…
If I were you I would ask him what plans he has for the phone system in your house – with three employees, i wouldn’t be surprised if Telstra sticks an ugly box inside the house somewhere!
Good luck,
P
Thanks for the feedback.
Parking won’t be a problem and I’d say the neighbours might like the idea of somebody being around during the day. We’ll see.
I’ll check the insurance policy and make sure he has insurance, too – I’ll get a certificate of currency. If I have to upgrade my insurance, I’ll get him to pay for the upgrade.
I don’t think he’ll need to make any changes, but if he does, I might get a quote for ‘making good’ the changes and have that money added to the bond.
Hopefully all will be well.
At least if it all does go pear shaped I’ll have no trouble re letting the house – it’s only been vacant 5 weeks in 7 years (2 of those weeks just now while I’ve been making repairs).
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auDepreciator,
No parking problem in Annandale! I drive through there regularly and I’m stuffed if I can park.Not knowing too much about what damage that can done to you’re house,being used as a business.I would think that it wouldn’t make much difference to you,as long as the rent kept coming in.And of course,no damage to the property.
bruham.
Bruham,
Plenty on parking in Annandale. It’s just near the shops and cafes that it gets crowded.I’ve asked the property manager to mention on the lease that a ‘home based business’ will be run from the house.
Spoke to my Landlord Insurance provider and they said I’ll be fine. They suggested I make sure his business has insurance for visitors and that I get a certificate of currency.
Running in a few additional phone lines and putting in some extra powerpoints won’t be a problem.
There will be extra wear and tear on timber stairs etc because of the additional traffic. It was a renovation I did without ever expecting to rent the place out (see below) – serves me right.
http://oak.arch.utas.edu.au/projects/aus/406/brun.html
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auHi guys…
Just some info from the ‘other side of the fence’. Hubby and I are currently renting a property and are running a business from home. We haven’t advised the owner, but mind you, it is a one man show with the work being off of the premises anyway. We have been there for many years and really, he’s only happy with the rent being paid well in advance, and that WE are the only residents in the property. Only the address etc are used really for paperwork/Invoicing etc.
Having worked in Property Management before, I would think that this would have been obvious that they were their own business and were intending to use the property as a business address? Perhaps they should be leasing a commercial property .. or at least advising YOU of what’s going on. Who did the PM speak to about employment?
Isn’t it usually a ‘condition’ of the lease that the peoples’ names on the lease are the ONLY people allowed to reside on the property. I realise that the other workers aren’t ‘living’ there as such, but they’re there over 40 hours? hhhmmmm…. me thinks that if this has gone on without your knowledge, then what else is?
What does the insurance side of things entail? We have our own business insurance, and separate contects for our stuff (that also has included that we have a business run at the property), but what kind of damage or changes would they necessarily do do you think? I would think that if there’s ANY difference to your cover that their business would be entitled to cover that hey? not sure….
Good luck Dep!
Tam
Hi there,
earlier in this thread someone briefly mentioned DA’s for running a business from a residential property.There can be some issues if your tenant simply moves in and starts operating a business. Some of these are real issues (parking, noise etc) and others are “techincal” issues (where the local council says “It’s not in the rules, therefore lodge a DA to have it approved”).
My concern for you is that if Council doesn’t like what your tenant is doing, you could be implicated by the fact that your lease now has a clause in it which acknowledges your awareness of the type of tenant and the fact they will be running a business.
My suggestion to you would be that you include another clause stating that all legal matters including obtaining the necessary approvals to allow the tenant to operate a business are the tenant’s repsonsibility. That way;
a) You are not implicated in any “illegal” use, and
b) The tenant can’t come back later and try to break the lease on the basis that they couldn’t run a business from the premises like they told you about (and put in the lease).Regards,
ClintThanks for the feedback.
He is currently employed and the new business kicks off in January. The PM spoke to his employer. And he has a copy of the tenant’s latest bank statement showing a balance in excess of $20K. And he owns property himself – he’s renting out his unit because he needed space.
The lease won’t mention employees, just a home office. And the lease isn’t in the name of a business. If he attracts the attention (and ire) of the council because he has employees, it’s on his head.
Public liability concerned me, but that seems to be okay.
I’m sure all will be okay. Though if 80% of small businesses fail, I’d say 99% of small marketing/advertsing/promotion businesses fail. At least his wife is gainfully employed. And at least that house rents out really easily and quickly if he bails.
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auScott.
Looks lovely.
PK
It is, PK. But the fact that I did it all myself means I hate the idea of selling it – makes acting with my head difficult when I consider my options with that house.
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
