Commercial activity in residential property

Discussion in 'Property Investment - Other' started by Yann, 25th Jan, 2014.

  1. Yann

    Yann Member

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    Hi there,

    It might be slightly offtopic for this forum, but I was wondering to what extent in NSW it is possible to rent a residential house with a lease agreement, and conduct a commercial activity in the premises (ex: childcare, hairdresser, massage ...).

    Is it only dependant on the lease agreement (ex: making a commercial lease on a residential property), or are there requirements on the zoning of the property (outside of any licenses for the type of business)?

    Second question for the owners in you, would you react positively if someone propose you a 'commercial-type' of lease agreement for your residential property?

    Thanks, all answers will help (including where to search for more info)
    Yann
     
  2. Aaron_C

    Aaron_C Finance Broker

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    Zoning would stop it.
     
  3. Dazz

    Dazz Banned

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    This, like many many aspects regarding what you may do on the land you own, is controlled and/or dictated by your local government authority, not you as the Owner.

    The misplaced common fallacy that as the Owner of the land you may do as you please needs to be stamped out. You are ultimately responsible for everything as the Owner, but you certainly are not entitled to do as you please as the Owner.

    Your local council will have their applicable TPS (town planning scheme) which will detail exactly what blocks of land are designated for what, and what those designations mean in terms of what they allow you to do on the property).

    If your land is zoned residential, and it is surrounded by other residential only land, the chance of the Council granting you permission is not good. You'd have to come up with some sweeteners for them (big customer carparking areas, turning circles etc.....these two will kill off most applications for normal blocks of land right on the spot) and then obviously address all of the concerns raised by affected neighbours during the process you had to formally notify them what you were proposing.

    Their "amenity" will be adversely affected and they won't like it.....real or perceived.
     
    Last edited: 26th Jan, 2014
  4. geoffw

    geoffw Untitled

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  5. Deltaberry

    Deltaberry Member

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    Insurance would not cover you.
     
  6. Terry_w

    Terry_w Member

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    Depends on the zoning. Many properties around the city of mixed use so you could run certain home based business without approval from the council - a brothel is probably not possible!
     
  7. geoffw

    geoffw Untitled

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    Home businesses do exist, so it's unlikely that they are unable to be set up or to obtain insurance. Difficult though perhaps.

    Your local council would be able to tell you about the zoning for the property and what could be done.

    An insurance broker could tell you about insurance. A normal landlord insurance may be difficult.

    A business may require modifications to the premises. A child are would require enclosed yards, safety features, possibly restrictions to areas of the house. A hairdresser or massage (a legal one anyway) may require a separate business entrance, parking, or public bathroom facilities, for instance. Certain modifications may are the house more difficult to sell.

    If you were going to go this way you may be needing a longer lease or higher rent to compensate- perhaps a commercial type of lease may be applicable.
     
  8. Scott No Mates

    Scott No Mates ...and people wonder why?

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    As Dazz points out, zoning plays an important role in what can be done on a block.

    Many residential zonings provide for home occupations but there are restrictions on signage, staffing & possibly parking, accessibility, licensing etc.

    Speak with the council town planner to determine whether your proposed use is permissible. If you have to lease a house, the difficulty will be finding an owner who understands the implications of what you want to do and the term of the lease.

    They will also need to vary the type of insurance over the building (at your cost) and seek their lenders' consent (at your cost), how long it takes to get approval, who will be paying the rent until approvals are granted etc.

    If there are modifications required, who will pay for these? Who will be paying for the make good?

    Why would you be seeking a house in favour of a shop to establish a business?

    Will you be living in the premises?

    There are plenty of businesses which have successfully started/operate like this as well as doctors surgeries & other medical practitioners so don't be discouraged from investigating the possibilities.
     
  9. Yann

    Yann Member

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    Thanks all, this forum is really a gold mine. I will definitively go and have a chat with town planners and also seek feedback from other professionals who operate their business from home.
     
  10. Dazz

    Dazz Banned

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    This seems to be the unspoken economic driver behind most of these queries.

    The proponent is invariably suffering inferior street position, lack of passing traffic, lack of parking facilities, putting up with grumpy neighbours who lose their amenity.....all of these negatives compared with simply renting a commercially zoned property ready to go without being hindered by any of these negatives needs to be balanced by something pretty profound.

    Avoiding paying 2 x rent and having the property double as both living quarters and working quarters seems to be the common thread.

    Could be wrong.
     
  11. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Simple, rent a commercial space with shop-top housing.