If you are working from home, operate through a limited company and want to provide a contractual basis for renting your home office use this simple home office rental agreement. This may help you to claim back, for tax purposes, overheads in running the business. Put things on the correct legal footing with this home office lease, including the right to use workstations, the licence fee payable, and termination rights.
When should I use a home office rental agreement?
Use this agreement
- when you want to provide a contractual basis for occupying space in the home
- when you're a home-based business, operating through a limited company
- when you own or have a lease of the property
- when you want to share the space for a short amount of time
- when you don't have a specific set area for the workstations
What's included in a home office rental agreement?
This agreement covers
- the right to use workstations without defining a specific area
- licence fee payable
- interest on overdue payments
- rights given to the sharer of the space
What's a home office agreement?
A home office agreement is a contractual licence used by an owner to share home office space with another or to provide a contractual basis for working from home.
Do I need a home office agreement?
You can use an agreement to share office space within the home when
- you are a start-up and home-based business;
- you own or have a lease of the property;
- you want to provide a contractual basis for occupying space in the home;
- you want to share the space for a short amount of time; or
- you do not have a specific set area for the workstations.
Who are the parties to the agreement?
The 'provider' is the owner or tenant of the property who is granting the right to share.
The 'sharer' is the individual or company sharing the home office space with the provider. If there is more than one sharer, each must be named to ensure they remain and joint and severally liable under the agreement. There can be a maximum of four sharers.
What if you do not own the property?
You may hold a lease of the property under a lease and you must check that sharing will not be a breach of your obligations as tenant. If the landlord's consent is needed, this must be in place before this agreement is completed.
If you hold the property under a lease, check carefully for any clauses that would prevent or restrict sharing with another business. If landlord's consent for sharing is needed, this must be obtained before completing this agreement and allowing the sharer to move in.
Will a plan be attached showing which workstations the sharer will use?
You do not need to attach a plan to the agreement but if one is attached it must only show the initial location of the workstations. You must retain the right to alter the location of workstations to ensure that the agreement is not interpreted as a lease, rather than as a licence.
What is the licence fee amount?
You'll need to determine the amount that the sharer must pay for the space. Under the agreement, the sharer must pay any VAT due on the licence fee. The licence fee can be a weekly or monthly figure and the agreement covers the situation where the agreement starts mid-way through a month. For example, if the sharer moved in on 15 March the payment would be half the monthly figure for the period up to 31 March with the next monthly payment being due on 1 April.
Is the licence fee intended to be all-inclusive?
The licence fee can be inclusive of the costs of services (eg internet, photocopying, reception and secretarial services) and towards utility bills. Alternatively, you can charge a licence fee and demand additional sums to reflect a contribution towards the cost of any services and utilities.
How long is the licence period?
The agreement runs for a specified period unless it is terminated by either party on notice and you must include a start and end date.
Ask a lawyer for:
- advice that your arrangement meets the requirements of HMRC for tax purposes
- businesses that don't operate through a limited company
- long term arrangements
- advice if your lease prevents you from sharing the property with anyone else
- workstations that cannot be moved to another space in the property