What The Laws Says: Running your business from home

What The Laws Says: Running your business from home

Although running a business from home seems logical and rightfully available to all property owners, Home-based businesses must consider and operate in compliance with municipal Zoning Regulations, Property Title Deed use descriptions and Community Scheme rules and regulations. Recent research by The Brand Business indicates that the number of home run startups and small businesses are steadily increasing, a trend that does not seem to be slowing down following the Covid19 Pandemic.[1] With our current economic climate and increasing fuel prices, running your business from home seems like the most financially logical way forward, but what does the law say about running your business from home.

What does the Law say…
Well apart from the formal legal process involved in having your company registered with the Companies and Intellectual Property Commission (aka CIPC) and registering with SARS for corporate income tax, you should also look at what use restrictions may apply to your property in terms of your municipality Zoning Regulations, the title deed of your property or the conduct rules of the community scheme within which you reside. Lets consider each of these “legalities”.

Understanding zoning Regulations
So Zoning Regulations, which will vary between provinces, municipalities and city councils,[2] are imposed to provide for proper property development for purposes of determining location, size, use and density of cities, industrial areas and residential properties so that resources and amenities can be correctly assigned and allocated to provide for an orderly and well managed city.[3]
Property that has been zoned for “ residential purpose and use”, is generally accepted to include the right to run a home business, provided the business itself and the services or products it provides does not require additional licenses or permits, (for example when providing or making food or selling liquor), is not disruptive in creating excessive noise and does not lead to increased traffic in a residential area. It is generally accepted that service industry businesses, such as bed and breakfasts, small hair, or beauty salons and even a small medical or dental practices, can be residentially operated. However, certain business operations are completely prohibited from operating residentially, including “ motor sales, heavy mechanical repairs, a car wash, spray painting operation, a shop or retail outlet, spaza shop, tavern or shebeen, restaurant or coffee shop”[4] as well as arcades.[5]
Its easy to determine your property zoning by checking your council website, where you will also see the prescribed micro-business behavioural criteria your business must comply with and which will confirm if you can run a home based business from your property with out obtaining special permission.

Legalities outside Zoning Regulations.
Apart from complying with the Zoning Regulation that applies to your property, there are some additional requirements the law requires you to comply with when you run a home business.[6] These generally include:

  1. Restrictions on floor space – the law limits the total area of your home that may be dedicated and used in running your home business.
  2. Residency Requirements – the owner of the business must reside in the property from which the home business is run. So not only are your required to actually live in the property from which you run your business, but your property should be large enough to accommodate your family and limited number of employees or staff.
  3. Off-Street Parking – Your property should allow for off street parking for any potential clients or customers, with the general rule being that there should be at least one parking bay per 25m² of the property being used for business purposes.
    Have a look at your local municipal by-law’s and Zoning Regulations, easily accessible from your municipality / council website or Google, which will clearly indicate requirements in regard to floor space, residential accommodation restrictions of staff and extent of off-street parking required.
    What about the Title Deed
    Besides having to ensure you comply with your municipal by-laws in terms of Zoning Regulations, floor space, accommodation and off street parking, you also need to have a look at the title deed of your property, which may have restrictions on what the property may be used for.
    In a recent High Court Judgement,[7] a property owner running the administrative operations of his construction business from his home was prohibited from carrying on with this home business due to the fact that the property title deed specifically provided a “ restrictive condition” that the plot may only be used for residential purposes and that no trade or business at all should be permitted to be run therefrom. The case made it clear that that it is unlawful and prohibited for the owner of land to perform or permit any activities that contravene the title conditions or zoning regulations of the property in question and that allowing this would amount to an offence punishable by law.
    But Wait, if you operate within Property Scheme, there are more rules
    Besides the above mentioned legal requirements you have to comply with to lawfully run your home business, you also need to be aware of additional requirements or limitations that may be imposed by a Homeowners Association (HOA) or Body Corporate (BC) where you live and run your business from your property within a community property scheme such as a gated estate or sectional title. It is accepted that a HOA or BC rules as contained in their constitution may bind property owners to certain use limitations, forfeiting their rights to operate a home business despite Zoning Regulations allowing this.

A 2013 High Court judgement of the Western Cape,[8] not yet overturned, confirms that restrictive provisions in a HOA or Sectional Title property scheme constitution and rules are not deemed to change, amend or override Zoning Regulations, but to create an exemption which you agree too when you purchase the property and whereby as a property owner you forfeit whatever right you might otherwise have enjoyed in terms of Zoning Regulations and running a home business.

What this means is that if you plan to run your business from property in a gated estate or sectional title scheme, you may have to first get permission to conduct your business from home. Where this is prohibited by the HOA or BC rules, its considered lawful and not contrary to Zoning Regulations that may provide otherwise.

In conclusion, if you are currently or are planning to conduct your business from home, make sure to check your that your “non-residential” use of your property is permitted by the municipal Zoning Regulations, the title deed of the property and HOA or body corporate rules.
Where can you find information on the legalities of running a business from home?
Zoning Regulations and your property classification can easily be found by visiting your local municipality website, while you can request to see your Title Deed at the Deeds Office in the province where you are based. Community scheme rules and provisions of the constitution can easily be obtained through the HOA or body corporate itself.

[1] (Tumisang Bogwasi “ Business statistics you Should Know in 2022” The Brand Business -https://www.thebrandbusinessbw.com/business-statistics-to-know-in-2022/ accessed 01/07/22)
[2] Kerry Dimmer – What are the legalities of running a business from home – 20 November 2020 – Private Property – https://www.privateproperty.co.za/advice/property/articles/what-are-the-legalities-of-running-a-business-from-home/7799 ( accessed on 30 June 2022)
[3] Annon. The World Bank “ Zoning and Land Use Planning” (https://urban-regeneration.worldbank.org/node/39#:~:text=The%20purpose%20of%20zoning%20is,down%20development%20in%20specific%20areas. Accessed 01/07/2022)
[4] Annon. Business Tech – What you need to know if you run a small business from home in a complex or residential estate in South Africa – 24 October 2020 – https://businesstech.co.za/news/business/442124/what-you-need-to-know-if-you-run-a-small-business-from-home-in-a-complex-or-residential-estate-in-south-africa/ (Accessed 30 June 2022)
[5] Kerry Dimmer – What are the legalities of running a business from home – 20 November 2020 – Private Property – https://www.privateproperty.co.za/advice/property/articles/what-are-the-legalities-of-running-a-business-from-home/7799 ( accessed on 30 June 2022)
[6] Kerry Dimmer – What are the legalities of running a business from home – 20 November 2020 – Private Property – https://www.privateproperty.co.za/advice/property/articles/what-are-the-legalities-of-running-a-business-from-home/7799 ( accessed on 30 June 2022)
[7] McKay and Others v Ursiweb (Proprietary) Ltd and Others (3510/2019) [2019] ZAFSHC 232
[8] Vanilla Street Home Owners Association v Ismail and Another (A345/2013) [2014] ZAWCHC 25 (5 March 2014)