Land where one lives, being permitted (5)
I believe the answer is:
islet
'land' is the definition.
(islet is a kind of land)
'one lives being permitted' is the wordplay.
'one lives' becomes 'is'.
'being permitted' becomes 'let' (to let something happen is to permit it).
'is'+'let'='ISLET'
'where' acts as a link.
(Other definitions for islet that I've seen before include "Detached bit of land" , "Ait or key" , "Eyot, key" , "named after Langerhans?" , "Very small area surrounded by water" .)