Can you live in a commercial property?

You can live in the same building or site as your business but it pays to do your research.

Town planning experts advise zoning is key to combining a commercial and residential lifestyle, with potential penalties possible for those who ignore rules and regulations.

Planners also warn of long waits for application or permit approvals while taxes and insurance also need to be considered.

COVID restrictions

Pandemic restrictions and changes have resulted in new interest in commercial and residential combinations, according to Stanton Hillier Parker’s Eugene Evgenikos.

The managing partner explained people were now tapping into their entrepreneurial sides, with small online businesses, in particular, enjoying plenty of activity.

“People who’ve been let off because of COVID have had to reinvent themselves,” Mr Evgenikos.

Where do I start if I want to live in a commercial property?

Employ an experienced town planner for new commercial-residential ventures, according to Mr Evgenikos.

He said consent applications could include plenty of confusing “grey” areas while it was also easy to incorrectly describe or define exact business use.

“If you’re not familiar with this stuff, it’s a bit of a minefield,” he said.

“But a planner can manage the process and tell you what you can and can’t do.”

Why is zoning important?

Due diligence is crucial when combining personal and commercial living. Picture: Getty

Zoning legalities could forbid you from both live and work in the same building or site.

Local councils determine a particular area’s zone with only particular buildings, and their uses, allowed.

Each zone is also subject to strict laws and policies, and every business must comply with them.

When it comes to land use, different states also have details you must follow, so it’s crucial to examine such legalities sooner rather than later.

“Ultimately, it comes down to what the zoning is on the underlying land of the building or property,” George Karavanas, GSA Planning principal, said.

“Once you’ve determined the zoning, you can determine if a home plus a business, occupation or industry is possible on the site.

“There are also zoning templates within each local government area, and each can have its own nuance within each zone.”

As such. Mr Karavanas said it was worthwhile approaching a local council duty planner for clarification.

“But once the zoning is known, the permissibility of a home business or industry can be confirmed by checking the objectives of the zone, as there is a schedule of what is permissible, with or without council consent, as well as what is prohibited,” he said.

What are the different zoning types?

Residential, business and industrial are the three main zones in metropolitan areas, Mr Karavanas explained.

Regional areas can include rural or agricultural zones.

Residential zones

In residential zones, home businesses are either prohibited or permissible with consent, depending on the dwelling and whether the area is high or low density, according to Mr Karavanas.

For example, apartment buildings in high-density areas can be found in both residential and business zones.

Business zones

While residential units may be permissible in business zones, home-based industries, including an online operation, are prohibited, Mr Karavanas explained.

“But offices, businesses and light industry are applicable without consent,” he said.

Industrial zones

“Typically, but not always, home businesses and occupations are prohibited,” Mr Karavanas said.

“However, home industries are permissible with consent.”

Mixed-use zones

As the name suggests, these zones allow for a combination of residential, retail, accommodation and industrial properties.

Why do home business definitions matter?

A strict explanation of your home business will affect what is permissible in your building or on site.

Each state also allows different businesses definitions and has contrasting policies and laws surrounding them.

For example, in NSW, the definition for a home business is any business, including an online operation, within a building or ancillary that does not include two or more people that are not residents, Mr Karavanas explained.

As well, the business must not interfere with the neighbourhood’s amenities and can’t feature signage or retail sales.

In comparison, similar definitions such as home occupation don’t allow the employment of non-residents while home industries must involve an industrial activity.

How long do I have to wait for approvals?

Sydneysiders seeking council approval may face a downtime of three to six months, according to Mr Evgenikos.

However, he said new ventures in Melbourne need only wait six to eight weeks, thanks in large part to abundant commercial-residential opportunities stretching throughout its urban sprawl.

Mr Evgenikos explained Sydney’s geographic inability to enjoy a similar sprawl had resulted in the city becoming a pressure cooker of restricted supply and exacerbating values.

“By law, councils should do what they need to do in 42 days,” he said.

“You’ve then got the right to go to the Land and Environment Court to push the approval through.

“But this is a very costly process unless it’s a significant development, and from a mum and dad-type buyer point of view, you wouldn’t get a trigger on the approval by doing this.”

What happens if I don’t comply with council regulations?

Those living on a commercial property must comply with strict council and state guidelines. Picture: Getty

In NSW at least, law breaches will result in council rangers issuing a directions notice, with the aim being to avoid legal action, according to Mr Karavanas.

“You will be given the opportunity to provide reasons as to why the notice should not result in the issuing of an order,” he explained.

“An order is a legal document that gives a direction of action to be undertaken to address the non-compliance.

“Failure to comply with the order can result in issuing of a fine, penalty infringement notice or prosecution.” 

What other issues do I need to consider?

Property loans and tax instructions are crucial when considering living in a commercial property.

Mr Karavanas advises double-checking loans with your lender, as your premium may be affected.

Lenders will also consider the property’s percentage of commercial and residential spaces to determine borrowing limits.

Meanwhile, tax conditions for such properties include the possibility of claiming deductions for some property expenses; possibly being liable for capital gains tax if the property is sold; and more.