Commercial use of residential property
Using residential property for business functions has become a popular way to increase rental income. While housing societies generally resist using the complete residential flat for commercial purposes, owners are permitted to utilize restricted sections. However, there are some restrictions and rules, that you must follow. You may use your residential property for commercial purposes only if your society’s management and zoning regulations (of local bodies) allow it.
The zoning Law in India is enacted by the municipal authority or any other authority that governs the use of land through out the city. The law attempts to divide residential neighbourhood from commercial areas to protect people from the detrimental effects of commercial activity while still facilitating the growth of business sectors.
Services provided by advocates, attorneys, physicians, and accountants are among the permitted commercial operations in any residential area. If your city enables you to utilize your property for commercial purposes, you must secure various licences including the NOC from the housing society and from the local municipal office based on the nature of your business.
The following activities are not authorized within residential premises, according to the Supreme Court (SC)
- Banquet Hall
- Any activity that includes the use of potentially dangerous or flammable chemicals.
- Automobile repair shops
- Construction supplies, liquor, and junk food.
In Mumbai, if you want to use your residential property, you must get NOC from the relevant society. You are allowed to use up to 220 square feet of business space in a residential flat. For this also you may have to obtain a shop/establishment licence from the municipal corporation.
Secondly changing a residential property to a commercial property may result in higher property tax. Depending on the region, size, and type of the company operation, the civic authority would assess commercial rates on the property as well as water and power supplies. Some enterprises do not need a government authorization certificate. Teaching, Yoga, Art, Dancing, and tuition classes are often excluded from commercial costs.
The distinction between residential and commercial property
A domestic zone is an area wherein existing homes such as flats, plots, detached houses, and floor flats are located. These regions may have hotels or motels but no departmental shops.
A business zone is an area that contains retail malls, commercial stores, office towers, hotels, clubs, restaurants, and so on. Some commercial activities are prohibited near religious sites such as temples, churches, or mosques.
The above-mentioned points are as per laws, reality may be different from city to city, depending on the governing authority. In a metro city like Mumbai, you may find the different scenarios like
- Here residential buildings situated facing the road are permitted to have shops on the ground floor facing the road.
- In big residential towers situated on the road, certain starting floors can have commercial establishments like offices, malls, banquet halls, restaurants, etc.
- In residential societies, even small nursing homes, maternity homes are also permitted, but they should have separate access.
- You might see even small Nursery schools operating in the housing societies.
So using the residential property for commercial use is a tricky affair as rules are changing from zone to zone, depending on the local authorities. Yes, certain commercial operations are allowed, as mentioned above. But if you want to have any other commercial operations from your residential property, please check the local municipal laws, and take permission from the municipal authorities accordingly.
Waiting for your views on this blog.
Anil Malik
Mumbai, India
4th July 2013