Since June last year, Cathleen Petersen has been running Geordie Paws from her home in Carden Avenue, South Shields.
The business provides dog grooming, day care - for a maximum of 10 dogs at a time - and kennel services.
But after being told she needed to submit a planning application to turn the use of the building from residential to business she has been refused by planning chiefs.
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She claims reasons given were disruption to neighbours, smell, traffic congestion and that outbuildings in her garden were not in keeping with the area.
The 43-year-old disputes the reasons and has asked the South Tyneside Council for evidence to back up their claims.
Ms Petersen said: “As soon as I was told I would need planning permission I applied straight away. I’ve since received notification to say it’s been refused. There have been no complaints so I don’t understand their reasoning.
“When I asked the council for evidence to back up why they have refused permission they keep ignoring me.”
The property is owned by Affinity Sutton Housing Group and she says permission was sought before she launched the business.
Ms Petersen added: “I run the business with my daughter Caitlynn and we are not overrun with dogs. It is run professionally and we have had no complaints.
“I could understand if there had been complaints. I even have a kennel licence from the council.”
It is understood Ms Petersen and her 19-year-old daughter have less than eight weeks to cease their business before enforcement action will be pursued.
A spokesman for Affinity Sutton said: “We are aware of the situation regarding Ms Petersen running a business from her rented home and we have been in regular contact with both Ms Petersen and the local authority. However we are currently taking legal advice and it would not be appropriate to comment further at this time.”
A spokesman for South Tyneside Council said: “The planning application was refused as it was felt that the scale and nature of this business was not appropriate for a residential setting. Ms Peterson has the right to appeal to the Planning Inspectorate. The council is currently considering its options with regards to formal enforcement action.”
A meeting in support of Mrs Petersen will take place at the Rose and Crown pub, Prince Edward Road, South Shields on Thursday at 4.30pm.