Advice and Opinion

Don't fall foul of the law when running a business from home

In the past, working from home was largely the domain of industrious stay-at-home moms and struggling freelancers. Anyone with a “respectable” career was expected to have a formal office space in the CBD. These days, however, a resurgence of creative entrepreneurship is seeing a dramatic increase in small businesses and start-ups, few of whom want – or can afford – traditional office space. Instead, home business environments have become the flavour of the day, creating an interesting dynamic in the property market.

“We’re seeing a lot of entrepreneurs breaking out of the traditional office mould,” says Leon Breytenbach, the Rawson Property Group’s Commercial Manager. “To cater to their needs, a lot of residential properties are now being advertised as ‘work from home opportunities’. The problem is: the zoning of those properties doesn’t always support those claims.”

Zoning is, admittedly, a bit of a minefield in South Africa, with different rules applying to different suburbs, and no two cities are the same. While efforts are being made to consolidate and simplify zoning schemes, it can still be difficult to figure out what a particular property is zoned for and what that actually means for the person who lives there.

“Work from home properties are often sold by residential rather than commercial real estate agents,” says Breytenbach, “and there’s no guarantee that the agent has the necessary commercial experience to advise buyers on business zoning issues.” While this is certainly not always the case, Breytenbach has noticed that many buyers and tenants are faced with the annoyance and frustration of learning that their newly-purchased or rented property cannot legally fulfil the purpose they intended it to.

“Business opportunities in Single Residential Zone 1 properties are quite restricted,” Breytenbach continues. “You can generally run a small home industry, a bed and breakfast, or a child care facility, but there are very specific limitations on all of those and anything else that requires special zoning. As real estate agents, it’s our job to inform ourselves of those limitations as far as possible, and pass on accurate information upfront to anyone looking to buy or rent a property to use for a home business.”

For those tempted to go ahead and run their business from home regardless of zoning, Breytenbach warns that neighbours these days are unlikely to just look the other way. “Neighbours are becoming very well-educated on legalities,” he explains, “and anything that causes a disturbance, is a nuisance to them, or may decrease the value of their property – increased traffic, decreased parking space, noise, smells, large signage, etc. – is likely to send them straight to the city planning department to lay a complaint.”

The best option for buyers and tenants is, of course, choosing a property that is already correctly zoned for your enterprise. If that’s not possible, however, or if you find yourself in a situation where you are unintentionally operating illegally, you have two options: apply for a temporary departure, or apply for rezoning.

“Rezoning can dramatically increase the value of a property,” Breytenbach points out, “so it’s a good option, but it is quite involved and can take some time. Temporary departures are slightly easier, but they are limited in duration and non-transferable, so they can’t be handed on to the next owner, tenant or business moving into the property. Whichever option you choose, you will still need to get your neighbours’ consent,” Breytenbach adds, “so it’s always better to keep things friendly, as far as possible.”

All things told, running a business from home can be a smart financial and operational decision, but if it’s not done right it can lead to some serious and expensive legal headaches. “Buyers and tenants need to be upfront about their intended purposes for a property,” advises Breytenbach, “and agents need to be honest about any legal limitations that may apply. If everyone does their homework, home businesses can thrive without any negative impact on a neighbourhood. Problems generally only arise when people are uninformed, or try to work around the law.”

To find out more about zoning regulations in your neighbourhood and how they could affect your home business, contact a Rawson Property Group franchisee in your area.