Can Residential Properties Be Used For Commercial Purposes? 

Introduction

Using a residential home for business functions has become a popular way to increase rental revenue. While housing societies frequently resist using the complete residential flat for commercial purposes, owners are permitted to utilize a restricted section. 

However, there are some restrictions and rules that you must follow. Possessing an office building is a wonderful approach for professionals to increase their business. You may utilize your residential real estate for commercial purposes only if your society’s management and zoning regulations allow it. It is worth noting that certain states have more permissive legislation that enables professionals such as physicians and attorneys to utilise up to 30% of their residential property for business activities.

Is There Legislation In India That Governs The Usage Of Residential Property?

The Zoning Law in India, enacted by the municipal government or authority, governs the use of land throughout cities. The usage of land in a certain region is defined by zoning regulations. The law attempts to divide residential neighbourhoods from commercial areas to protect people from the detrimental effects of commercial activity while still facilitating the growth of business sectors.

What Does The Law Say?

Services provided by resident advocates, attorneys, physicians, and accountants are among the permitted commercial operations in any residential area, according to the legislation. 

If your state enables you to utilise a piece of your land for commercial purposes, you must secure various licences, including the agreement of the society and the local municipal office, based on the nature of your business.

Remember that working from home is frequently tolerated in certain sections of the country. An operation involving the transfer of commodities from residential premises, on the other hand, is considered commercial and is normally not permitted unless appropriate licences are secured.

Once a property is designated as commercial, it is handled as such for all reasons, including taxation. Nevertheless, the following activities are not authorised within residential premises, according to Supreme Court orders:

• Banquet Hall 
• Any activity that includes the use of potentially dangerous or flammable chemicals.
• Automobile repair shops
• Construction supplies, booze, and junk food are all sold at retail stores.

“If you want to utilise a residential property for commercial purposes in Mumbai, you must get a No-Objection Certificate (NOC) from the relevant society.” You can use up to 220 square feet of business space in a residential flat. While back office work is normally tolerated by society, “activities requiring the use of property such as godowns, warehouses, refrigerated storage, and labs are not tolerated,” says Amit Desai, Owner of PropInvest Realty.

Important Things To Keep In Mind

Keep the following considerations in mind before turning a portion of your home into an office.

Obtain a shop/establishment license from the appropriate local authorities.

Before you apply, be certain about the area you require and the business you want to run.

Changing a residential property to a commercial property may result in higher property taxes. Depending on the region, size, and type of the company operation, the civic government 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.

This implies you can run these enterprises without having to alter the property.

Disobeying government restrictions and conducting commercial activity in residential zones without changing the property may result in significant legal issues, which vary by state. For example, in Noida, the punishment for conducting commercial operations from a private residence is one percent of the entire worth of the property, which is a sizable sum. As a result, before making any choice, always obtain legal counsel and take the necessary actions.

What is the distinction between residential and commercial property?

Let us first define 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 department shops.

A business zone is an area that contains retail malls, commercial stores, office towers, hotels, clubs, restaurants, and so on. This zone is controlled by Commercial Zone regulations, which specify which commercial activities are permitted in specific zones. Some commercial operations, for example, are prohibited near religious sites such as temples, churches, or masjids.

Conclusion

We can see how critical it is to obtain a licence as well as all of the other approvals required to operate residential real estate as a business property. Residential property utilised as commercial property is governed by legislation in India. The Zoning legislation governs how properties are zoned and what land uses are forbidden and permitted. Some activities, such as selling liquor, car items, machinery, lumber, and so on, are prohibited in residential neighbourhoods under certain restrictions. If you want to utilise your home property for commercial purposes, you must obtain a licence from the local government. You will also face penalties if you utilise the land for commercial purposes without a licence.

FAQs

• How does a residential property convert into a commercial?

You will need to submit an application for special permission to the neighbourhood municipal authority, outlining the nature of the activity and the location you require for it. Additionally, approval from the Town Planning Authority may be required.

• Which type of property is used for residential or commercial uses?

Commercial real estate is anything leased to operate a business, while residential real estate consists only of single- and multi-family structures. Residential properties include all types of apartments, flats, and duplexes. Commercial real estate is compensated for by hotels, godowns, and startups.

• Can I rent my residential property?

If there isn’t a mortgage on the property, then yes. Mortgaged properties may be rented out with the mortgage provider’s approval.

• Can I use my flat as an office?

Yes, you are permitted to use rented space for business purposes. However, you must obtain all relevant authorizations, including the landlord’s consent, who can oppose or want to raise the rent due to commercial use.

Reference From : https://timesproperty.com/news/post/increased-unemployment-rate-to-affect-homebuying-blid3589