Can You Run a Business From Your Strata Property?

Since the covid pandemic there has been a meteoric rise in the number of people working from home on either a casual basis, or even fulltime, many of whom are running their own business. In the post-pandemic era, it has become ‘normalised’ to operate a business out-of-office. Also, because our lives have become increasingly digitised, with online entrepreneurship on the rise too, it has made running a business from home far more accessible and popular.

Can You Run a Business From a Strata or Community Titled Property?

In South Australia, running a business from a strata or community titled property depends on the nature of the business, the relevant strata articles or community by-laws, local planning rules and insurance requirements. Low-impact work from home may cause no practical issue, but activities involving clients, staff, signage, deliveries, noise, odours, stock storage or use of common property are more likely to require approval or be restricted. If the proposed use is inconsistent with the scheme’s articles or by-laws, the owner or occupier may need corporation approval and, in some cases, a special resolution to amend the relevant rules.

In South Australia, the answer can also be slightly different depending on whether the property is part of a strata corporation under the Strata Titles Act or a community corporation under the Community Titles Act.

It may also be subject to insurance requirements and can impact your tax. These compliance issues can be off-putting and costly to overcome, making it a challenge to operate a commercial enterprise from a strata property.

 What the articles or by-laws Typically Say

In South Australia, the terminology depends on the type of scheme. Strata corporations are governed by articles, while community corporations are governed by by-laws. These rules may regulate how lots and common property are used, including whether business activity is restricted or requires approval.  Therefore, it is essential to understand these articles or by-laws, as they often include rules regarding signage, noise and the use of common areas. 

How to Get Approval From the Body Corporate

The first step to getting approval from the body corporate is to review the articles or by-laws regarding commercial use or change of use. This is coupled with the need to assess the local council’s zoning and how it may relate to your intended use of the strata space. In order to get the articles or by-laws changed a special resolution vote would be required.

 The Special Resolution Threshold

In strata schemes, the special resolution threshold is a vote that requires more in favour than against and no more than 25% of the total number of lots/votes against for it to pass. It requires strong support and is generally used for major decisions, such as changing articles or by-laws or altering common property. Because running a business from a strata property typically requires formal Corporation approval, if the articles or by-laws restrict it, you must pass a Special Resolution to amend the rules.

What to Include in Your Application

When preparing a formal application for submission to the strata manager or committee, your proposal should include any impacts your operation may cause, including noise, increased patronage, the potential for more postage or waste etc. You should also detail specifically what your business does, the hours of operation and any relevant insurances you may have. Depending on your intended use and council regulations, the strata committee may require council permission before endorsing your request.

Which Businesses Are Suitable for Strata Living

Suitable businesses for strata living are those that require minimal physical space, create low levels of traffic and make low levels of noise.

 Businesses That Usually Work

Businesses that typically work in strata property include IT/web development, freelance journalism or writing, accounting, graphic design work or creative arts and online retail with minimal inventory.

Businesses That Usually Don’t

Any business that generates foot traffic, unpleasant odours, noise or frequent deliveries is not suitable for strata living. This might include catering/hospitality, manufacturing, retail, fitness/wellness practices and medical consulting.

Insurance Implications

Standard strata insurance covers shared common spaces, the building and some elements of normal residential activity. It does not cover your business liabilities.

Liability Exposure

Operating a business within a strata property exposes you to specific insurance risks and requirements. You may need a dedicated Public Liability Insurance policy to cover potential damage your operation may cause to the building or those nearby, as well as potential injury or accident incurred by a visitor to your residence. 

Undisclosed business activity may create issues with the corporation’s insurance, particularly if the activity increases risk, involves visitors, stores stock or equipment, or creates liability exposure not contemplated by the policy.

The final consideration is that typical home insurance and also the building’s strata insurance won’t cover assets associated with your business. This may require a specific policy. 

Residential vs Commercial Reclassification 

Obtaining a reclassification from a residential property to a commercial one within a strata building is extremely difficult.

Owners vs Tenants: What Each Needs to Check

Running a business in a strata property requires both owners and tenants to ensure legal compliance.

Owner Considerations (Sales Contract, Land Use)

Owners must verify the permitted uses/zoning, understand the strata articles or by-laws and verify insurance requirements.

Tenant Considerations (Lease Clauses)

Tenants must confirm the space meets their specific needs, undertake any approval requirements (such as signage and fit-out needs) and identify their liabilities.

Common Friction Points With Other Residents

Generally, a business is allowed only if it does not create excess noise, cause foot traffic due to additional non-residents attending the premises, impact common spaces, increase insurance premiums for the building, or violate local council zoning laws. These are common friction points with residents that a strata committee will assess.

Noise

If your proposed business will create more noise than is fair and reasonable within a residential space, this may be a pushback point from strata committee members. Of particular concern is if the noise will occur early in the morning or late at night.

Signage

If your business requires signage that is visible from common spaces or other resident’s property, you may not be able to display it.

Foot Traffic and Deliveries

Increasing the visitation of the strata property caused by deliveries, clients or staff will be seen as a hindrance to other residents.

Use of Common Property

Any commercial activity you intend to undertake within a strata property should not require the use of common property. Ideally, you should also minimise any need for visitors to your business to need to use these areas.

When Body Corporates Apply Practical Discretion

Practical discretion by body corporates usually applies when the business activity has arguably no impact on tenants and poses no risk to insurances. For example, a sole trader operating a copywriting business or as an independent graphic designer will likely be allowed to conduct their activity without any need for amendments to strata articles or by-laws.

 How By-Law Breaches Are Resolved

Strata by-law breaches are resolved via different means, from just a simple chat with a neighbour to resolve an issue like a noise complaint, to formal notices from the strata manager or committee. In extreme situations it may require mediation with a government agency or lawyer, and potentially escalation to the Magistrates Court that will see legally binding orders made. 

Tips for Operating in Harmony With Neighbours

Operating a business in a strata property while maintaining harmony with neighbours is a matter of simply being respectful. Keep noise to a minimum and don’t have people constantly coming and going. Avoid anything that might create a strong odour, like pungent foods or chemicals. Also, avoid using common spaces and don’t generate excess waste or have excessive amounts of mail that might be unsightly or create mess.