Why working from home could get you evicted – how to ensure you’re not at risk
If you’re one of the lucky people that get to work from home, whether full time or just occasionally, the last month has been an absolute treat.
Glorious weather if your internet coverage manages to stretch to the garden, and a host of World Cup games, tennis and other things to stick on in the background.
Even when the sky is grey and there’s nothing on the telly, working from home can be a joyful experience – who wouldn’t prefer to sack off the commute and spend their day working in their pyjamas?
But it’s not all fun and games – forget to tell the right people and there could be huge consequences.
Are you risking your home?
Whether you rent or own a leasehold or freehold property, spending any time working from home could see you in breach of your terms and conditions.
There are three main reasons for this:
- Your mortgage or your landlord’s mortgage is "residential" not "commercial"
- Your insurance terms need to change, so not telling them could invalidate it
- There are covenants on the deed of the property, that ban certain uses
And that’s before you get into the fact that invalidating your insurance can also invalidate your mortgage, or any restrictions placed on your tenancy agreements.
Oh, and if your landlord hasn’t been informed that you’ll be working from home, and so had the opportunity to update the insurer, then they too could end up invalidating their home insurance and with it risk breaching their mortgage deal.
It might sound like a small thing – and you might believe you’ll get away with it – but if there is a problem and it emerges you’ve been working from home the consequences can be extreme.
No insurance payout and potentially being evicted or having your mortgage called in to boot in the worst case scenario.
Attack your bills
The good news is that it’s an easy fix. Generally a phone call or two is all that’s needed.
Noel Summerfield, head of household insurance at Admiral , argues that many people who work from home will be doing clerical work that won’t affect the cost of their cover, “it’s always best to check to avoid any doubt and minimise the risk of invalidating your policy”.
“If you start using your home for work, even if it’s part-way through your policy term you must inform your insurer," he added.
"Waiting until the end of your policy or renewal date could mean your insurance is invalid, and in the event anything goes wrong it could end up being costly.”
Telling your mortgage lender is generally equally painless – if you’re not using more than one room of your house to work in, there generally isn’t an issue.
In terms of covenants on the deeds of the property, this is something that will be on the title deeds to your home and you can check with the Land Registry if you can’t find them – but won’t typically come up unless your neighbours specifically complain about it and take a court order out to stop you running a business from home.
“ I worked in insurance but had no idea”
Andy Morris, 35 from Cardiff, was one of those almost caught out.
Andy’s has been working as an artist and designer from home for the last four years. Before that he worked in the finance department for an insurance firm, but wanted to find a more creative way of working.
He said: “Although I worked in the industry for almost a decade, I didn’t realise I would have to notify my insurance company about running my business from home."
The good news is that once he made the call, it was all sorted out quickly.
"Thankfully there was no change to my policy, but they did want to know that I was working from home," Andy said.
“I also had to set up business insurance for my work and had to do a lot of research in terms of what else needed to be set up to get the business off the ground.”
Who works from home?
According to research from the TUC earlier this year, as many as 1.6 million employees now regularly work from home. That’s around one in 16 members of staff, up from around one in 20 back in 2005.
On top of that there are now two million freelancers in the UK, with more than four million self-employed workers, many of whom will do at least some work from their home rather than dedicated business premises.
A study from insurer Admiral found that the big selling points for going solo include an improved work/life balance, more autonomy and the chance to earn more money.
What’s more, there is a wide-ranging number of job roles being carried out from home, ranging from sales managers to dog walkers, psychologists to beauticians.
Why working from home affects your insurance
If you do work from home it can change what you need your policy to cover.
For example, if you are carrying out regular office work from home on behalf of your employer, this could be classed as using your home for ‘clerical business use’.
Your insurer needs to be informed that you’re using your home in this way – if you don’t, and need to make a claim, any payout could be reduced or denied entirely.
If you keep stock for a business at your house – almost half (46%) of Admiral’s customers who work from home do so – then your insurer may see this as presenting an increased risk of fire or theft, which could result in a higher premium.
In fact, depending on the materials included in the stock, you may need to arrange a specific insurance policy rather than adapting your existing policy.
Customers at the door, business rates and tax rebates
There’s an added consideration if you have customers come to your home, perhaps because you’re a tutor or a childminder.
You may need liability insurance to cover you should one of these visitors injure themselves in your home.
On top of that, having people coming and going will likely be seen as increasing the threat of theft or damage to your belongings, meaning a bump in your premium policy.
And if you have enough people dropping by, you might also need to tell your local council – especially if you want to put up advertising.
There’s also a possibility that your home would need to pay business rates to the local council, and comply with health and safety regulations in a way that a private home wouldn’t.
There’s more information on the rules around working from home – including some of the tax benefits you could claim – on the Government’s running a business from home page here .
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