MAKE YOUR FREE Home Office Rental Agreement
What we'll cover
What is a Home Office Rental Agreement?
Home Office Rental Agreements are contractual licences used by a homeowner or tenant to share their home office space with another or to provide a contractual basis for working from home. A Home Office Rental Agreement can help those working from home through a private limited company to claim back overheads incurred in running the business for tax purposes.
For use in England and Wales only.
When should I use a Home Office Rental Agreement?
Use this Home Office Rental Agreement when:
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you want to provide a contractual basis for occupying space in your home office
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you own or have a lease of the property
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you are a startup or a home-based business, operating through a private limited company (LTD) or you want to share your home office space with someone else’s LTD for a short amount of time
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you own or rent a property in England or Wales
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you don't have a specific set area for the workstations
Sample Home Office Rental Agreement
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AGREEMENT FOR HOME OFFICE SPACE
This Agreement is made on the date of the last signature below between:
- of , (we, us or our); and
- a company incorporated in England and Wales with registered number whose registered address is , (your or you).
Meanings
- In this Agreement the following definitions apply:
Agreement The agreement set out in this document including any agreed amendments; Licence Fee £ plus value added tax to be paid on the first working day of each week; Licence Period On and including until and including ; Property The property at , let to us under the Lease; Space Space for a maximum of workstation(s) within the Property and the right to use the kitchen and WCs in the Property.
Our Responsibilities
- We permit you to use the Space (or such other space for the same number of workstations as we may select) until the end of the Licence Period or earlier if ended in accordance with this Agreement.
Your Responsibilities
- You must:
- keep the Space tidy;
- use the Space (or such other space as given by us) and any furniture and equipment in a reasonable manner;
- pay the Licence Fee on the due dates plus VAT and interest at 4% above Barclays Bank plc base rate on all late payments. Payment is to be by Standing Order or Direct Debit;
- comply with all current legislation applicable to your use and occupation of the Space;
- conduct your business from the Space in a way that does not interfere with us or any other occupiers of the Property. Any act or omission on the part of any of your employees is deemed to be the act or omission of you;
- at all times allow the use of the room in which the Space is located for our domestic purposes;
- vacate the Space at the end of the Licence Period or on the earlier determination of this Agreement;
- indemnify us from and against all costs, losses claims and demands arising out of any breach by you of any of the terms of this Agreement.
- You must not:
- block or interfere with our right of possession and control of the Property;
- obstruct access to or within the Property;
- use or allow any other person to use the Space or the Property as its registered office without our express written consent. If we request in writing that this must stop you must stop anyone who is using the Space or Property as its registered office;
- bring any office furniture into the Space or install or connect to any utility or electronic communications service in the Space except as permitted by us in writing in our absolute discretion;
- change the Space or carry out any works in or to the Space;
- unless required in an emergency, move any fire extinguishers;
- interfere with our business or in any way try to tempt away or make any offer of employment to any of our employees or member of staff. If you breach this provision then we are entitled to compensation equal to the total annual salary of the employee(s);
- cause any nuisance or inconvenience to us or any occupiers at the Property;
- do anything that may bring the Property into disrepute or that may affect our or any other occupier's credit rating;
- display anything on the windows or doorways of the Property without our written consent in writing;
- cause any damage to the Space (or such other space as we give you) or any furniture and equipment.
- You agree and confirm that nothing in this Agreement creates the relationship of landlord and tenant or confers on you any security of tenure, and acknowledge our right at any time to alter the location within the Property of the Space.
- This Agreement is personal to you and is not capable of assignment.
- Where you are more than one natural or legal person, your liability is joint and several.
Termination
- This Agreement can be terminated:
- by not less than one month's written notice given by either party to the other;
- immediately on written notice from us to you in the event that the Property and/or Space becomes unusable or inaccessible due to fire, explosion or any other cause, and any advance payment of Licence Fee made by you before such notice in respect of a period after that date must be repaid by us to you;
- by not less than one week's notice in writing from us to you in the event of you committing a breach of your obligations in this Agreement;
- immediately on written notice by us in the event that you suffer an event of insolvency including receivership, administration, bankruptcy or liquidation.
- Any notice by us to you will be sufficiently served if left at the Space.
- This Agreement shall be governed by and interpreted according to the law of England and Wales and all disputes arising under the Agreement (including non-contractual disputes or claims) shall be subject to the exclusive jurisdiction of the English and Welsh courts.
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About Home Office Rental Agreements
Learn more about making your Home Office Rental Agreement
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How to make a Home Office Rental Agreement
Making a Home Office Rental Agreement online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Home Office Rental Agreement you will need the following information:
Party details
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What are the office provider’s details (ie name and address)?
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What are the sharer company’s registered details (ie name, company number and address)?
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Who will sign the Home Office Rental Agreement on behalf of the sharer?
Office space
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What is the address of the office space?
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Does the provider own or rent the space being let out? If the provider is renting the space:
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On what date were they granted the lease of the property?
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Does the provider have the landlord's consent to share the home as office space?
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How many workstations will the sharer have?
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Will a plan be attached to the Agreement showing which workstations are going to be used by the sharer?
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Is the licence fee intended to be all-inclusive?
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Between what dates can the sharer use the space?
Licence fee
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What is the licence fee amount?
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Will the licence fee be paid to the provider on the first day of every month or every week?
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If the licence fee is paid monthly, would you like to include details about when the first payment is due? If so:
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What is the amount of the first payment?
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On what date is the first payment due?
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What is the last date covered by the first payment?
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Common terms in a Home Office Rental Agreement
Home Office Rental Agreements enable a homeowner or tenant to rent their home office to a business under a licence. To do this, the Home Office Rental Agreement covers:
The parties
The Home Office Rental Agreement starts by clearly identifying the parties to the Agreement (ie the provider and the sharer).
Meanings
This section provides the meanings of certain defined terms used throughout the Home Office Rental Agreement. For ease of identification, the defined terms are capitalised throughout the Agreement. Examples include ‘Agreement’, ‘Licence Fee’ and ‘Space’.
Our responsibilities
This section sets out the office space provider’s responsibilities. Most importantly, this covers the provider permitting the sharer to use the office space for the duration of the Agreement.
Your responsibilities
This section sets out the sharer’s responsibilities in relation to the office space. This includes keeping the office space tidy, paying the licence fee and all applicable VAT, and at all times allowing the provider the use of the room in which the office space is located for the provider’s domestic purposes. This section also details what things the sharer should refrain from doing in relation to the Agreement, including obstructing access to or within the provider’s property and bringing any office furniture into the office space without the provider’s permission.
Termination
This section details how the Home Office Rental Agreement can be brought to an end. This includes who can give notice to end the Agreement and in what circumstances and how much notice must be provided.
This section also specifies the jurisdiction of the Agreement. This clarifies which country’s legal system must be used to resolve any disputes under the Agreement.
If you want your Home Office Rental Agreement to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Home Office Rental Agreement for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
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Legal tips for making a Home Office Rental Agreement
Remember that this Home Office Rental Agreement is a licence and not a lease
A lease grants a business exclusive possession of a property for a defined time period. A licence, on the other hand, gives a licensee (ie the person granted the licence) a personal right to do something with regards to the licensor’s (ie the tenant’s or owner’s) property. In other words, leases grant more rights than licences. As a result, licences should be used for short-term lettings where the licensor may need the property back at short notice.
This Home Office Rental Agreement is designed to be used as a licence, with the provider being the licensor and the sharer being the licensee. It is, therefore, crucial that the provider does not do something that could mean that the Home Office Rental Agreement is considered to be a lease instead of a licence. For example, allowing the sharer the exclusive right to use the workspace.
For more information, read Leases, licences and tenancies and Ask a lawyer if you have any questions.
Understand what expenses you can recover as a home-based business
As a home-based business, you can recover certain overheads associated with running your business.
As a private limited company, you can recover certain allowable expenses. These include the HMRC flat-rate allowance to cover expenses which can be reimbursed through HMRC. If you work from home regularly, you may also be able to claim against additional household expenses incurred by your working from home (eg heating and phone and broadband expenses). However, you will need to be able to prove any claims you make as HMRC requires accurate records as justification for your claim. As a result, it is important that you not only maintain well-organised books and records of all business expenses, but that you also keep copies of all receipts related to the expenses. You can find out what expenses you can claim for using the Government’s expense tool.
Be aware that different rules apply to self-employed individuals (eg sole traders and partnerships). For more information, read the Government’s guidance on simplified expenses if you're self-employed.
Understand when to seek advice from a lawyer
Ask a lawyer for advice:
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on whether your arrangement meets the requirements of HMRC for tax purposes
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on businesses that don't operate through a limited company
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on long-term arrangements
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if your lease prevents you from sharing the property with anyone else
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on workstations that cannot be moved to another space in the property
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if you are located in Scotland
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if this Home Office Rental Agreement doesn’t meet your specific needs
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Home Office Rental Agreement FAQs
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What is included in a Home Office Rental Agreement?
This Home Office Rental Agreement template covers:
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the details of the office provider (ie the homeowner who is renting out the space)
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the details of the sharer (ie the business that is renting the space from the provider)
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the right to use workstations without defining a specific area
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the licence fee payable
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any interest chargeable on overdue payments
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the rights given to the sharer of the space
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how to end the Agreement
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Why do I need a Home Office Rental Agreement?
By making a Home Office Rental Agreement you provide a contractual basis for renting out your home office. This not only helps put things on the correct legal footing but, if it’s your business, may also help you claim back overheads in running the business for corporation tax purposes.
For more information, read Sharing space.
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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 jointly and severally liable under the Home Office Rental Agreement. There can be a maximum of 4 sharers.
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What if I do not own the property?
You may rent the property under a lease (ie a Tenancy agreement) and you must check that sharing will not be a breach of your obligations as a tenant. Carefully check your lease for any clauses that would prevent or restrict sharing with a business. If the landlord's consent is needed, this must be in place before this Home Office Rental Agreement is completed and before you allow the sharer to move in.
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Will a plan be attached showing which workstations the sharer will use?
You do not need to attach a plan to the Home Office Rental Agreement. However, 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 Home Office Rental Agreement is not interpreted as a lease rather than as a licence.
If you wish to attach a workstation plan, make sure to do so before the Home Office Rental Agreement is signed and ensure that all parties sign the Agreement itself and the workstation plan.
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What is the licence fee amount?
You'll need to determine the amount that the sharer must pay for the space. Under the Home Office Rental Agreement, the sharer must pay any Value Added Tax (VAT) due on the licence fee. The licence fee can be a weekly or monthly figure and the Home Office Rental Agreement covers situations 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.
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Is the licence fee intended to be all-inclusive?
The licence fee can be inclusive of the costs of services (eg internet, photocopying, or reception and secretarial services) and utility bills. Alternatively, you can charge a licence fee and require the sharer to pay additional sums to reflect a contribution towards the cost of any services and utilities they use. This is for you to decide.
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How long is the licence period?
The Home Office Rental Agreement runs for a specified period unless it is terminated (ie ended) by either party by giving notice. In the Home Office Rental Agreement, you must set out the start and end dates between which the sharer can use the space.
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How can the Home Office Rental Agreement be brought to an end?
The Home Office Rental Agreement sets out the period during which the sharer can use the office space. Once this period comes to an end, the sharer is no longer allowed to use the space. However, the Home Office Rental Agreement can be ended early in certain ways. These include:
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by either party providing one month’s notice in writing to the other party
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by the provider giving the sharer at least one week’s notice, if the sharer breached their obligations under the Agreement
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immediately, by the provider giving the sharer written notice, if the sharer suffers an insolvency event (eg liquidation or administration)
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immediately, by the provider giving the sharer written notice, if the property or the office space becomes unusable or inaccessible due to certain unforeseeable circumstances
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