Marina Constas, director, BBM Law

If you are thinking about starting a small business in your sectional title complex or housing estate, make sure you study the municipal by-laws and the governing documentation of your homeowners’ association, or risk having to shut down.

Attorney Marina Constas, a director of BBM Law who specialises in residential community schemes, cautions that even if regulations and the HOA’s constitution or memorandum of association might allow a home business, there are several additional hoops that would have to be addressed.  These include limitations with regard to floor space used for the business and numbers of people who work there, among others.

“Even in large estates, where the properties might be able to accommodate small businesses, the directors need to be really specific about having the correct rules in place to accommodate certain home enterprises. A formal application should be made to the directors, and the business must comply with the rules of the estate and the municipal by-laws,” she stresses.

Constas cites a recent case in which the directors of an estate in Fourways, Johannesburg, approached her about a homeowner who wanted to close her hair salon and work from home. “She planned to convert an entertainment area into a home salon. In terms of Section 20 of the Home Enterprises for Professional Occupation, City of Johannesburg Land Use Scheme (2018), an owner wishing to use his or her residential building as a home enterprise may do so, provided certain conditions are met.

Types of businesses not permissible

 

“And while the hair salon in question might in theory be allowed to operate so long as it complied with certain conditions, a pet grooming salon would be a no-go from the outset,” she notes.  Similarly, businesses such as restaurants, coffee shops, taverns, shebeens and spaza shops are barred from being allowed to operate in a residential area. Others not permitted include retail outlets, heavy mechanical repairs, a spray painting operation, car wash, places of amusement, communes and hotels.

If the business is permissible

Constas continues:  “Once the business owner has established that their particular trade is not specifically excluded, they would then need to ensure that not more than 25% of the built floor area of the unit will be used for the non-residential purpose; or 50m² of the dwelling.

“The principal of the business must also be a permanent occupant of the residential home and the number of people who may work there is limited to two other people in additional to existing residents in the home.”

Parking is a further consideration, and must be to the Council’s satisfaction, Constas states. “It is also stipulated that any home business, profession or occupation that causes an undue increase in traffic will not be permitted.

“In addition, the enterprise must not negatively impact any infrastructure services and place greater demand on these than normal domestic use would. Any business that interferes with the aesthetic appearance of the neighbourhood or creates noise, smells or dust would not be permitted.”

Approval by the estate

Once the business owner has ensured compliance with the conditions set out by the Council, there are also the rules of the specific estate to be considered, Constas says. “In a community housing scheme like a residential estate, the business should be subject to approval by the Homeowners’ Association. The rules of the estate where the hair salon was planned stipulated that no business activities could take place without the written approval of the homeowners’ association and the approval of the City Planning Department.”

In the case of the hair salon, the HOA was concerned about the number of people coming into the Estate as well as parking arrangements.  The resident was therefore not able proceed with her home business plans.

Conclusion

Constas urges anyone considering a home business to study the municipal regulations and the constitution of their homeowners’ association. She urges homeowners’ association directors to ensure that their rules clearly state that no business activities or trade may take place without the written approval of the homeowners’ association, and that the rules are aligned with the municipal by-laws.

“In this way, each application can be considered individually, and everyone’s interests are protected. In the event that the rules are breached, the association would be entitled to institute legal proceedings in respect of such a breach, as well as refer such conduct to the relevant authorities for breach of the by-laws.”

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