Granny Flats: The Need To Know Guide To Building A Granny Flat

Granny Flats: The Need To Know Guide To Building A Granny Flat

Granny flats represent an amazing way to generate above average rental returns from an existing investment property.

They are relatively cheap to build, are generally well received by tenants and provide a much needed affordable housing option in many markets.

This article is all about granny flats: the need to know guide to building a granny flat.

Are granny flats a good investment?

When it comes to rental return, adding a granny flat to your existing property can be a great way to generate additional cash flow.

We recently helped a client build a granny flat on their existing piece of land. The result of their $110,000 investment was an increase in rent of $320 per week.

When it comes to capital growth a granny flat may increase the re-sale value of your property as a whole, but is generally capped to the cost of constructing the granny flat.

What’s legal?

The laws regarding building and renting granny flats varies from state-to-state, and even from council-to-council.

There are laws surrounding the size of the block, the ability to rent the house and secondary dwelling out to un-related parties and the floor size of the granny flat itself.

In NSW granny flats are legal statewide, as a result of an innovative move by the NSW planning department.

To build a granny flat in NSW you simply need to select the right type of block and ensure the plans for building your granny flat meet the complying development regulations.

A brief run down of the complying development regulations in NSW’s Wyong City Council area on the Central Coast:

  • Total land size needs to be 450m2+
  • Frontage needs to be 12m+
  • The granny flats floor space can be no larger than 60m2
  • The granny flat may be either attached to, within or separate from the principle dwelling
  • The granny flat must be at least 0.9-2.5m from the side boundary (depending on the land size)
  • The granny flat must be at least 3-10m from the rear boundary (depending on the land size)
  • The primary dwelling must be no more than 50% site coverage

Example:

NSW Requirements

Please note these are very quick guidelines designed to help you better understand whether or not the property you own, or the property you’re looking to buy, meets the NSW Governments complying development regulations. There are many more specific regulations that come into play when deciding to build a granny flat.

We always recommend you contact the local council or a qualified town planner to learn more about their specified guidelines and what’s legal for your property.

In QLD the laws regarding granny flats are a little less straightforward.

At this point, to build and rent out a granny flat, the legislation varies from council-to-council.

Some of these variations include whether a granny flat can be advertised and rented as a separate home to the primary dwelling, and whether it can be rented to an unrelated party.

Before you begin a project it’s also important to contact a local property manager an make sure there’s sufficient demand for a granny flat in the suburb.

At this stage most councils in QLD will allow a granny flats to be built, however they will not let the granny flat to be rented to an unrelated party.

A brief run down of the complying development regulations in QLD’s Morton Bay Council area on the north side of Brisbane:

  • The secondary dwelling can be no larger than 60-85m2 – depending on the suburb.
  • There is no minimum land size requirement, but the primary dwelling must not be more than 50% of the total land size.
  • The secondary dwelling must be no less than 1.5m from the rear and side boundaries.
  • The secondary dwelling must be set back 6m+ from front boundary.
  • The secondary dwelling must be within <20m of the primary dwelling.

 

Example:

Granny Flats

Another important issue to address is whether the property is in a fire or flood zone, or is likely to be affected by things like natural disasters.

Land banking can be a smart investment strategy. Knowing you can add a secondary dwelling or increase the rental return on your property through extension or renovation can help you manufacture much needed cash flow and capital growth in the future. However, you want to be confident that in the future you’re actually are allowed to build the dwelling and it meets the requirements for complying development, as well as any other requirements to do with flood or fire risk.

How to go about building a granny flat?

  1. Contact a town planner before your property goes unconditional and make sure you can build a granny flat or secondary dwelling on the property.
  2. Contact a number of builders or granny flat specialists and find out whether they can draw plans to suit the particular block.
  3. Consider the hazards and constraints to ensure the property you’re looking at buying, or the property you already own, meets the legal requirements.
  4. Arrange the builder to do a site inspection of the property. A professional should be able to come in and assess hazards, soil, sewer lines / easements, flood risk, etc.
  5. Once the application has been completed you should get designs drawn up for a proposed plan. You also need to get approval once those designs are done.
  6. Approval can take 14-20 days (in NSW under complying development) and more time in other states.
  7. One you have selected a builder and agreed on a fixed price contract construction shouldn’t take too long – anywhere from 8-12 weeks from excavation, slab, building and completion.
  8. Begin to advertise the granny flat for rent a month before construction is completed. In areas where the granny flat cannot legally be advertised to rent, contact your property manager to assess your options.

The process of building a granny flat is going to be different in every state and in every suburb.

Looking to buy an investment property in the next 12 months? Learn more about how we can help you here…

The information contained in this article is for general information purposes only and should not be regarded as a substitute for professional legal, financial or real estate advice. The information is provided by Pumped On Property and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained in this article for any purpose. Because every persons needs and financial situations are different, the information in this article are intended as a guide only. Any reliance you place on such information is therefore strictly at your own risk.

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Kristal Everingham

About

Kristal Everingham is a Property Acquisition Manager at Pumped On Property. Her mission is to show you how to replace your income through property investing so you can do what you love…full time.

6 thoughts on “Granny Flats: The Need To Know Guide To Building A Granny Flat

  1. I really liked your post! I’ve been thinking about adding a granny flat to my home, but I had no idea that it could be so beneficial to do so! In your post you mention that by simply building a granny flat in my home, I could generate extra cash flow by renting it. I would love to have a little bit of extra money each month, so I’m going to start looking for a contractor to build the flat for me! Thank you for posting!

    1. Hi Kael,

      I know of many owners and investors throughout Australia who use and love this strategy to generate additional cash flow.

      I have personally used this strategy twice and love the additional cash flow this strategy brings.

    1. Hi Damien,

      This would be a question that you will need to discuss with a solicitor, a town planner and the local council.

      On face value this could get you into some trouble down the track.

    1. Thanks Anthony. Building a granny flat is an extremely simple process but many investors get caught out by working with companies who take too long, dont know what they are doing or charge too much. After helping our clients to build granny flats for a number of years now you can get much better outcomes if you know what your doing.

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