How easy is it to legally run a business from home?

02 December 2014

With the increasing number of people working from home, preferring to be freelancers or contract workers, and more entrepreneurs starting up their own businesses, the need to set up a home office is one that is just as normal as having a study or lounge in the home, but the legal implications of doing so must be considered if it is not just one person using the space, says Lanice Steward, managing director of Knight Frank Residential SA.

Thanks to technology and forward thinking companies allowing workers to work from their choice of premises, whether at home or wherever their laptop is, home offices have become quite common. This cuts down on the wasted time commuting and cuts the resources and energy consumed within the company’s premises and they tend to keep just the key staff in the office. There are even situations where people can work from another country, and it is no longer seen as imperative that they be in the same office as the rest of the employees.

There are, too, many more people (particularly in Cape Town) opening their homes to guests as bed and breakfasts or guesthouses, she said.

All rights to a property are governed by the Land Planning and Ordinance Act, which determines whether the owner is able to run his business from home or not. If the home is zoned Single Residential 1 (SR1), it is primarily zoned as accommodation for a single family. It could, however, also be used as bed and breakfast accommodation, have a home office in it or be used for child care.

One of the most important requirements to running a business from home is the ratio of off street parking available. There has to be one parking bay available per 25m² of the building used for business purposes. Another is that if there are any additions made to the property for the business, these cannot be more than 25% of the overall floor space of the house and the space must be able to be re-integrated back into the home if it is ever sold.

There is a difference, however, between a home office and a business run from home, the differentiation must be made to establish what is allowed. A home office is generally one person who is a freelancer or contract worker who has the flexibility to work from whichever premises he chooses. He would, she said, in all likelihood not have visitors or meetings with clients at his home, so there would be no negative impact on the neighbours (and in fact they might not even know he works from home).

If, however it is a business where there are staff members involved, the maximum allowed to work on the premises is three people.

Bed and breakfast accommodation has become popular as a means of supplementing one’s income, said Steward. The owner is, however, only allowed to rent out three rooms with a maximum of six guests and he may not convert the units to self-catering units. This is in keeping with building regulations which stipulate that single residential units may only have one kitchen.

If the owner wishes to rent out more rooms or have self-contained units, he must apply for a departure from the Council in order for the operation to be legal, she said.

There is, too, an increasing need for child minders and parents would tend to prefer home care to larger institutions, said Steward. If a homeowner chooses to run a child minding service, only six children can be accommodated and there must be ample indoor and outdoor play area as enough parking for parents who are dropping off and collecting their children.

For any other business in a residential area, the owner will have to apply for Council’s consent.

“Although the regulations may seem onerous,” said Steward, “they are not an impediment to running a business from home but they do ensure that the integrity of the neighbourhood is maintained and that the neighbours are not disturbed.”