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Question Title: Running a bed and breakfast from a rented property
| Question: 304 |
| I have been approached by a potential tenant for a house that I manage. He has told me that he wants to run it as a bed and breakfast. Can he do this and, if so, are there any problems in this of which I should be aware?
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| Answer: |
| The title deeds of the property would need to be checked to see if there are any restrictive covenants which might prohibit such a use. Also, as this would be a change of use of the property for planning purposes, an application would have to be approved by the local planning department. This, in itself, could be quite a lengthy process. Even if both these issues could be resolved satisfactorily, then a number of other problems arise. These concern the statutory provisions that would apply. Paragraph 4 of Schedule 1 Housing Act 1988 excludes business tenancies to which Part II Landlord and Tenant Act 1954 applies, from creating an assured shorthold tenancy. For it to be a business tenancy the use for business purposes must be a significant part of the tenant's occupation of the premises. Running a bed and breakfast establishment might well satisfy that requirement if that intention were known to the landlord in advance. However in a recent case, Brewer v Andrews [1997], where a large house, let on an assured shorthold tenancy, was actually used as a bed and breakfast, it was held that it was not possible to infer a business tenancy from the individual circumstances. However, the danger remains as business tenancies enjoy a greater degree of security of tenure than ASTs and they are also subject to rent control. Unfortunately, the boundary between a residential and a business tenancy is not entirely clear. The statutes are also mutually exclusive, so where there is a degree of mixed use, it will be important to determine which statute will apply. In this case, you should recommend that the landlord seeks legal advice before he enters into any binding agreement.
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References:
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Letting Handbook |
Chapter 6 |
letting-handbook-and-factsheets.html
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Tenancies