More on self-employment and the bedroom tax – and a human rights issue?

I scribbled some notes yesterday about the suggestion that was made in the Lords, by Earl Attlee a government spokesman quoted below (a), that a room used for work by a tenant need not count as a bedroom for bedroom tax purposes.  I thought I’d pull together those points and add some more.

There have also been a flurry of comments in social media saying that this is not possible and making a couple of common points.

  • Planning consent is required to run a business from a dwelling (b)
  • Landlords won’t allow it (c)

Neither of these is entirely accurate (again spelt out below) although (c) is still too common.  Many businesses don’t require planning permission and landlords are being encouraged, by the professional bodies and government, to remove the limitations in tenancy agreements.

The Earl is a DCLG Spokesman rather than DWP but his comment still raises a couple of interesting issues.

The first is an additional facet in the ‘room’s use’ argument. If a tenant – with the landlords knowledge and any other necessary permissions – is using a room solely as a workplace then it isn’t a bedroom. If the landlord knows about this usage then it clearly can’t argue that it’s a bedroom. The landlord may though believe that the permitted business doesn’t require using the room entirely for work. In that case the argument joins the series of appeals at FTT around the usage question and may follow the line of reasoning in the Bolton and Carmarthen UT cases.

More interesting is to consider what happens if that argument loses and the benefit cut is imposed. If the tenant cannot afford to stay in the property after the ‘bedroom tax’ is applied (remembering that HB is an in-work benefit) then moving to a smaller property becomes necessary.

BUT….

There will not be a room in a smaller property to carry out the self-employment; so the bedroom tax has caused the tenant to lose his livelihood. That opens up a range of issues under human rights and equalities legislation.

Article 23.1 of the Universal Declaration of Human Rights states: Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment

Notes.

(a)    Hansard

“13 Mar 2014

Earl Attlee: My Lords, as I have indicated, we have put out advice to all social landlords on the need to seriously consider allowing their tenants to set up businesses. There is a misconception among social tenants that they cannot run a business from a council flat. They can, but they need to apply for permission from the landlord. This process is necessary because the landlord needs to be able to accept sensible web-based businesses while not allowing industrial processes to be carried out from the flat.

Lord McKenzie of Luton (Lab): My Lords, should a social landlord acknowledge a room as being available for home-working, would that preclude it being a spare bedroom for the purposes of the bedroom tax?

Earl Attlee: My Lords, the noble Lord has not disappointed me one little bit: I was certain that he would not be able to resist this opportunity. The spare room subsidy encourages people to make full use of their property and to consider running a small business—which I think is highly desirable.”

 

(b) Planning consent is required to run a business from a dwelling

From the Planning Portal which is the UK Government’s online planning and building regulations resource for England and Wales.

You do not necessarily need planning permission to work from home. The key test is whether the overall character of the dwelling will change as a result of the business.

If the answer to any of the following questions is ‘yes’, then permission will probably be needed:

  • Will your home no longer be used mainly as a private residence?
  • Will your business result in a marked rise in traffic or people calling?
  • Will your business involve any activities unusual in a residential area?
  • Will your business disturb your neighbours at unreasonable hours or create other forms of nuisance such as noise or smells?

Whatever business you carry out from your home, whether it involves using part of it as a bed-sit or for ‘bed and breakfast’ accommodation, using a room as your personal office, providing a childminding service, for hairdressing, dressmaking or music teaching, or using buildings in the garden for repairing cars or storing goods connected with a business – the key test is: is it still mainly a home or has it become business premises?

https://www.planningportal.gov.uk/permission/commonprojects/workingfromhome/

 

(c) Landlords won’t allow it

In late 2010 business and enterprise minister Mark Prisk and housing minister Grant Shapps wrote to England’s council and housing association landlords telling them they should encourage tenants to work from home

The letter said that just 190,000 of England’s 3.5 million self-employed live in social housing, less than in any other tenure. Of those, just 10% work from home or in the same property, compared with 24% of home-owners.

‘There appears to be a common misperception among social tenants that there is a blanket ban on working from home or that it is only allowed in specific and often very restricted circumstances,’ the ministers said.

The letter was endorsed by the chief executives of the National Housing Federation and Chartered Institute of Housing and coincided with the launch of a guide from the chartered institute explaining how social landlords can promote home-working.

The guide says social landlords can promote home-working as part of their efforts to tackle worklessness. It also says tenancy agreements should be revised so that tenants no longer need permission to set up their own home-based business.

There was an estimate of 22, 000 businesses operating from social housing at the time of this letter.

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