What are the legalities of running a business from home?

What are the legalities of running a business from home?

Private Property South Africa
Kerry Dimmer

There are so many elements impacting on the ‘where’ of work today. Among them are consideration such as: the pandemic forcing companies to embrace work-from-home for employees; advances and proliferation of technology-based platforms for collaboration; ease of fibre-based connectivity; costs of office space and relative maintenance and utility bills; uncertainties around stable electricity; the need to reduce environmental and time-loss impacts of transport; fluctuating petrol price increases and decreases; and enabling a work-life balance scenario.

The solution has been obvious for decades; businesses that can, particularly micro enterprises, should work from a home office, which has been dramatically highlighted and proven viable by the Covid-19 pandemic lockdown restrictions. The realisation is that staff are proving adaptable and manageable online, while simultaneously reducing running costs impacts. This may mean forsaking some foot traffic, but that’s where online marketing efforts compensate.

Louis Meyer, consultant with Minde Schapiro & Smith Attorneys in Bellville Cape Town says that currently there is an increase in businesses vacating their larger premises in favour of smaller ones, with the majority moving to a home-based office. This has of course prompted many to question the legalities of doing so, but the good news is that generally no official consent is required. “However, a home-business operator must ensure that the use of the property is in line with the zoning regulations applicable to your property,” says Meyer.

Zoning regulations vary among city councils but generally, as is the case in Cape Town, a residential property that is zoned for Single Residential use within its municipal borders, can be used as a business base, and can use it as the registered business address, provided the type of business does not require a specific business licence. Such licences are however largely directed at high-density consumer operations like arcades and food and drink outlets.

Meyer recommends that to ensure your home-based business will or is operating within the boundaries of the Local Authority’s Municipal Planning By-Laws (which in turn are informed and governed by the Land Planning and Ordinance Act), the first stop is to check in with a Town Planner.

Should the property not be zoned for your type of operation, you may consider requesting that your area be re-zoned, but this can be very expensive, takes time and is procedurally heavy.

“Let’s assume that you have established that your business is compliant in terms of zoning, there are applicable rules to which you must comply. First is that not more than 25% of the built floor area of the dwelling, or 50% thereof, whichever is the lessor, be used for non-residential purposes. The owner must also permanently reside in the dwelling and the number of people working within that business is limited to two in addition to the members of the household who live there permanently.

“Parking is of particular importance as many local authorities require that off-street parking must be available for business visitors. The rule is that there has to be one parking bay available per 25m2 of the building being used to run a business. This makes it somewhat more difficult for those living in estates or sectional title complexes, and for which incidentally, permission must be granted from Homeowner Associations or Body Corporates to operate a home business in terms of the constitution of the estate or the management rules of the Body Corporate.”

CEO of RE/MAX Southern Africa, Adrian Goslett says that the types of businesses that are typically allowed to operate in residential areas include those are active within the service industry. “Bed and Breakfast’s (B&Bs), small hair and beauty salons, even a dentist or small medical practice are allowed.” B&Bs are however generally restricted to no more than six paying guests and no more than three rooms for those guests.

Goslett says that while it might be tempting to forgo the inconvenience of acquiring legal clearances for a home business, bear in mind that it’s not easy to hide the fact that you are running a business from home. “If a neighbor takes a dislike to your residential company and lays a complain, which happens more regularly than you may think, you could face serious penalties if you don’t have the required permissions.”

Complainants have to prove they are adversely affected by the business conducted in their neighbourhood, and would lodge such a complaint with the Local Authorities Enforcement Department, confirms Meyer. “Similarly you may be subjected to an inspection by Local Authority Land Use and Building Inspectors who will be checking to ensure you conform with zoning regulations,” he says.

With the business-from-home model growing in popularity, particularly among those who have had to close their leased-building or commercial/retail office space, it is highly advised to engage with neighbours and advise them of your intent. They will need assurances that noise levels will not increase, that their own parking facilities will not be compromised, and that your business visitors will not attract criminal elements into the neighbourhood.

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