Set up an Office at Home

It may help cut down on rent and commuting cost, but check the legal and operational limits before doing so.

Who can set up an office at home?

Full-scale commercial usage of residential flats is often opposed by cooperative housing societies, a certain percentage, or in some cases, a fixed area, is legally marked for official use. This area can vary across the country and even within the city, and you will have to go through the different state laws, local or housing society by-laws to find out the exact figure. For instance, within the Mumbai Metropolitan region, an area of 220 sq ft can be used for certain commercial activities. The rules are as valid for apartments as for independent houses. The usage is also confined to professions, such as those practiced by doctors, lawyers and chartered accountants. Besides, activities like teaching painting or dancing, holding yoga classes, tuitions, or conducting cookery classes, are also allowed in a residential area.

The dual usage of space has been allowed after various court rulings and Acts passed over the past five decades. In one such ruling, the Maharashtra State Cooperative apellate court favoured a resident of Ghatkopar, Mumbai, in 1986, stating that activities such as conducting yoga classes in a residential flat did not breach the by-laws of the cooperative housing society. According to the ruling, professional activities, such as teaching of certain art forms, would not be viewed as commercial activity, even if charges are levied.

In another case filed under the Karnataka Shops and Commercial Establishments Act, 1961, it was ruled that the use of residence as an office by CAs, lawyers and doctors would not be considered a commercial activity. The premise was that the work and skill involved in such professions are predominantly mental or intellectual rather than physical or manual.

However, these should not be considered as blanket rulings.

Seeking mandatory approvals

Before you convert a part of your house into an office, you will need to acquire permission from various authorities. If you don’t, the business will be considered illegal.

You need three types of approvals.

1. Permission from the local municipal authorities

Explaining the kind of commercial activity and the area you will require to conduct the business. Once the go ahead is given, commercial charges will be applicable on property, water and other taxes paid on the said property. Even electricity charges will be levied according to the commercial rates applicable in that area, the size of the property and the commercial activity conducted. A person will also need a shop and establishment license from the local municipal authorities before starting the business.

2. Permission from the town planning authority

Since certain zones are demarcated in the town as residential commercial areas, one will need permission from the town planning authority before starting a commercial activity.

3. Approval from the housing society where the flat is situated

If the person is a tenant, he will need a no-objection statement from his landlord as well. The society may levy higher building maintenance and parking charges on such flat owners.

Pros and cons

Pros:

1. You can save on rent. The savings will be higher if your current office is in an expensive commercial/ business area. As you won’t have to buy the same equipment for your home and office, such as a printer or furniture, you can shave off more expenses.
2. You can devote more time to the family, which is beneficial if you have young children or elderly parents, who need constant care.
3. One of the biggest savings is on commuting time, which could be channelled towards more productive pursuits.
4. Working from home also means that you can be your own boss and fix your timings to accommodate other tasks that need to be completed also you can develop a flexible office schedule.

Cons:

1. Your productivity may fall if there are no deadlines or job pressure or if the demands of home are greater and become more time-consuming.
2. If you aren’t diligent about your work schedule, it could impact productivity, or you could find yourself more involved with personal and familial work.
3. The absence of colleagues and collegial atmosphere may also lead to a diminished competitive spirit.
4. Office and home help to de-stress the pressure in each sphere. You could feel high-strung if you are overworked on both the fronts.
5. There could be the problem of neighbours, who could create a fuss if the number of visitors is large as it may lead to more parking problems and greater commotion in the area.

Despite the charges paid to the society and local municipal authorities, you could end up saving 30-40%:

1) On lease compared with the amount and

2) Charged by commercial establishments.

Source: ET Wealth