Definitely it sounds great to use your residential property such as rented or ownership flat for your commercial use as it saves money.
Is It Legal to Use Residential Areas for Commercial Use?
For professionals like doctors, lawyers, and accountants this option is legally available. However, there are some limitations for other professionals, according to the zoning law and the co-operative housing society rules. Let’s discuss the aspects of this matter in detail.
For some professionals having an office front in their residential space works as a tool to boost their businesses. It saves the rental amount and associated taxes for having a different commercial space and it also reduces the cost of commuting. No matter how lucrative that may sound there are some limitations for using this as a viable option.
In India, local municipal authorities draftzoning laws which mainly separates the residential areas from commercial zones to protect residents from commercial activities, while at the same time facilitating the development of commercial areas. Some states are more tolerant in terms of usage of residential area for commercial/business purpose and it’s allowed to use up to 30 percent of the residential area according to suchzoning laws. However, depending upon the business category, one needs to obtain permissions from the society and the local municipal office for the usage of residential area for business purpose.
Having an office front at your home is permissible across different states in India, but moving and storage of goods on a regular basis will be tagged as commercial and it won’t be allowed until you get all the necessary permissions. Once you get the permission of converting your residential property to a commercial one, you will be paying the property taxes at the commercial property slab, which is generally much higher than residential property taxes. However, businesses like dance classes, painting, yoga, and tuition classes do not need any conversion and these are exempted from any sort of commercial charges. You need to check with local laws in your State regarding which businesses are exempted from commercial property taxes.
As per the directions of the honourable Supreme Court, some activities are banned inside any residential property:
- Banquet hall
- Any usage of hazardous and combustible substances
- Automobile repair shop
- Retail stores selling liquor, junk food and construction materials
“In Mumbai, if you wish to use a residential property for commercial purposes, you need to obtain a No-Objection Certificate (NOC) from the respective society. You can use up to 220 square feet in a residential apartment for commercial use. While back office work is usually permitted by the society, activities which require the use of property as godowns, warehouses, cold storage, and laboratories are not permitted”, says Amit Desai, Owner, PropInvest Realty.
Before converting a certain portion of your residential house into a commercial area, there are few things you need to be very sure of. Such as:
- Get a shop and establishment licence from your local municipal authority. Without this license you have no permission of using your residential house for any commercial purpose
- Decide the area of your residential property that you will be utilizing for business purpose as well as the nature of the business that you want to carry out on such area.
- Commercial taxes are higher than the residential ones. You will be paying more as commercial charges will be applicable on the property and water and electric supply, according to the area, size and nature of your business.
If you are currently utilizing your residential property for commercial purposes without any permit then you might be breaking the law and can be fined a hefty amount. Seek professional legal help from a property lawyer who can guide you in this matter. For more details or legal help, contact here or email to [email protected] with your queries.