The saying goes – “Knowledge is Power” – and that is true. Often, however, knowing that you don’t necessarily know is a seed of power in itself, because it gives you the opportunity to educate yourself with regards to a certain matter and correct yourself where you’ve previously gone wrong.
It makes more sense therefore to say “Applied knowledge – is power”.
Managing your Risk
When looking at Guesthouse Business Compliance (a term coined while doing research for this article), and from carefully studying the behaviour of people around this Compliance aspect, we realised that it ultimately boils down to the management of risk, whether it’s the risk of not being able to sell your Guesthouse now or in the future, or the risk of being discovered if you operate an illegal business and being closed down by the local authorities.
You manage your risk when you apply a resource (the resource is knowledge in this case) to control the probability and/or impact of an unfortunate event, or on the upside, you manage your risk so that you can maximize the realization of an opportunity.
It’s not our place to complicate matters (I’m aware of the fact that this article is about value creation and that gain should exceed pain!) but rather to create awareness and provide concise education about the legalities that do exist when it comes to Guesthouse Business Compliance.
Therefore, we’ve created a “checklist” that will assist you in determining whether your Guesthouse is legal or not and what you need to do to get it legal.
We’ve done it in the form of a flow diagram to show you exactly where you need to start, and the questions you need to be asking.
Please note that this information will only apply to the eight districts covered by the City of Cape Town Municipality.
You can download the Guesthouse Business Compliance Framework flow diagram here.
You start by asking whether your property is zoned correctly and whether your Use is permitted. Please remember that the definition of a boarding house in the zoning scheme (page 103) includes the use of a guesthouse and a guesthouse in turn is an establishment that offers between 4 and 15 guest rooms. Please refer to my article on the new Integrated Zoning Scheme here, should you still have some unanswered questions.
Primary and Additional Use rights will allow the “Use of the property” in the specific zone without the approval of Council. For Consent use rights you will have to apply to Council.
Once your zoning and Use rights have been established you must satisfy yourself that your property complies with all building and parking requirements as set out in the zoning scheme and that all your building plans are approved by Council. If you have ticked all of these boxes, you’re 90% there.
Catering for Customers
The next question you need to ask is whether or not you prepare or supply any meals to guests. In the unlikely event of your establishment not supplying any breakfast, your business would now be 100% compliant (unless for instance, you sell Liquor, then you’ll need to apply for a Liquor Licence).
If you do serve breakfast or any other meal you will have to apply for a Business Licence to prepare and sell meals to your guests. This is an easy process and it takes approximately a month to get this licence.
During the licensing process they will also re-establish your zoning and have a look at your Council approved plans after which the Business Licence will be granted. Note that this Business Licence is not transferable, so in the case of a sale of the Guesthouse, the new owner will have to re-apply for this licence.
The permission with regards to zoning however is attached to the Land Use and is transferable and it is one of the most important factors that we look at when selling Guesthouses.
Being a 100% legal and compliant Guesthouse is in your best interest and it creates a net of safety for you, your future business and your guests. Get compliant, today!
For further questions on Guesthouse Business Compliance please get in touch with Cheri Hughes directly.