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Rules to Convert Home Into Office

India: It is difficult to convert home into office. When 36-year-old Michael Fernandes, founder of product designing company, Marshalkraft, decided to lease an office in Mumbai, he was deterred by the exorbitant rents. "We needed a place for conducting meetings with our clients and handling back-end administrative work as our workshop was outside the city. However, we couldn't decide on a suitable place as the commercialrentals were too high," says Fernandes. His solution was to convert a flat he owns in Mumbai as his office, saving on the rent and, more importantly, cutting short the commuting time considerably.

Though Fernandes had to invest about Rs 1 lakh on renovating the flat, including buying office equipment and changing the furniture, this was less than the amount he would have had to invest in renting a new office. "Initially, many of my clients were surprised, but none of them had any apprehension about meeting us in a residential set-up," he adds.

Who can set up an office at home?

Om Ahuja, CEO, residential services, Jones Lang LaSalle India, explains that while 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.

Ravi Goenka, advocate, Goenka Law Associates, explains that you need three types of approvals. "Firstly, you need to take 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," he says. 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 licence from the local municipal authorities before starting the business.

The next permission will be needed 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," adds Goenka.

 The third approval has to be 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.

Despite the charges paid to the society and local municipal authorities, you could end up saving 30-40% on lease compared with the amount charged by commercial establishments.

Pros and cons

Operating an office from home can not only save on rentals, but also allow one to be close to the family and cut down on commuting time. 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.

On the flip side, 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. The absence of colleagues and collegial atmosphere may also lead to a diminished competitive spirit.

Besides, 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. Besides, 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

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