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Mortgage Distress and Internet Growth Fuels Home Office Renovations

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Mortgage Distress and Internet Growth Fuels Home Office Renovations

August 2007

Homeowners facing higher mortgage payments are looking at getting more out of their homes than just a place to live with an increasing strong demand for home offices in renovations, according to Archicentre, the building advisory service of the Royal Australian Institute of Architects.       

“Fourteen years ago renovations incorporating a home office accounted for approximately 5 per cent of Archicentre design concepts. Today 7 out of 10 Archicentre Design Reports incorporate a home office/ study area,” said General Manager of Archicentre, David Hallett.

“This trend also reflects the number of people starting a new career from home or people wanting to supplement their income by working from home.

"The rapid growth of the Internet providing a cheap and sophisticated information service is one of the dominating factors for the boom in home offices.”

At the end of the March quarter 2007, there were 6.43 million active Internet subscribers in Australia, comprised of 761,000 business and government subscribers and 5.67 million household subscribers. Source: Australian Bureau of Statistics

According to the ABS of the employed people at work in November 2005, 25 per cent worked at least some hours at home in either their main or second job.

The proportion of employed people who worked at least some hours at home in their main job, increased from 5.5 per cent of those aged 15-24 to 27 per cent of those aged 35-44 and to 45 per cent of those aged 65 and over. Source: Australian Bureau of Statistics

Mr Hallett said that a significant number of people now work in excess of 48 hours per week often taking work home to complete.

“The home office trend is also being fuelled by significant corporate restructuring in both private and government sectors. This restructuring has led to an increased number of unemployed professional people at around 45 to 50 years of age looking for employment. Often the only way these people can become employed is to start their own business.

“Young professionals, especially women involved in starting a family, are also part of the emerging home office trend.

“The home office is the perfect solution as it removes much of the overheads of starting a new business and allows the person to develop a network without immediate financial pressures. The rapid spread of telecommuting and use of the Internet has also assisted many people to operate from home and lower their overheads.”

Mr Hallett said that people purchasing a property for a home office should have a clear understanding of their requirements and if the property can be used for the type of business they are intending to conduct. Even the simple addition of a doorway to create a separate entrance for the business could cost several thousand dollars if there was not an appropriate and easy place to access the building, and issues such as ventilation, light and space to operate must also be considered.

“Failure to plan the home purchase strategically can leave a new business with a major upfront unbudgeted cost,” Mr Hallett said.

“One of the vital aspects of purchasing a home with the intention of setting up a home based business is to check with the local council in relation to planning requirements and an accountant for taxation implications. It is too late to check the regulations once the contract of sale is signed,” he said.

“Many older larger houses are suitable for renovation in relation to home offices with roof spaces available for conversion. In smaller homes and townhouses the mezzanine floor has become a popular solution to create extra space.”

  • People buying a home with the intention of setting up an office need to consider a number of factors which could influence the success of the operation of the office including: Can there be a separate entry to the office area to which clients come? This is an extremely important point as you and your family may wish to maintain your privacy rather than have clients entering through your home.
  • Can you separate the business operations from home life? Using the home for business can have its drawbacks if the competing needs of the family use of facilities are not managed carefully; this can also damage your business if clients feel uncomfortable.
  • Location and visibility from the street may be important for your business.
  • The provision of sophisticated communications for the premises including dial-up or broadband cable facilities for internet access or wireless access.
  • Is the chosen area of adequate size for the type of work you will carry out? Home office areas in an L or U-shape tend to be the most productive as you can have all your important items within reach. When planning the office consider the storage needs of the business, not just for the client's files and reference material but also the equipment eg. Computers, fax, photocopier, printer, scanner etc. Consider the space and facilities also in terms of any support staff you may require.
  • Is there adequate light and ventilation? Because people will spend a considerable amount of time in the home office it is important that the area has adequate lighting and ventilation.
  • Have you chosen the quietest area to work? In choosing an area in the home or on the property the consideration of noise is vital, including domestic noise and any exterior noise sources.
  • Have you checked with the local council regarding planning laws in relation to your future business activities? This is a major consideration if you are considering purchasing a new property; check the local planning laws and what you can do before you purchase the property. Do you have adequate parking for the people who may visit your home office? Will your business activity disturb neighbours?
  • Before you set up your home office check with your accountant on any tax implications which result from tax claims on running costs.
  • Ensure that you have appropriate insurance to cover people visiting your home and any business equipment in the new home office.

“Striking a harmonious balance between comfort and function is the key to any successful home office design,” Mr Hallett said.

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