From adding value to your property, to caring for a loved one or a bit of additional rental income, granny flats have a lot of benefits.
However, there are still a number of things you should consider before you build one.
The many benefits of granny flats
In Australia’s expensive property market, granny flats have become a very sought-after add-on for buyers and current homeowners. They’re particularly popular in NSW, thanks to the state’s favourable planning environment. Unlike other states, in NSW they can be built without a costly Development Application (DA) and they can also be rented out to third parties. Neither of these things are possible in some other Australian states.
According to the Housing Institute of Australia (HIA), more than 10,000 granny flats were built nationwide in 2018, with a whopping 60% of these new additions in NSW. HIA even believes they could become part of the solution to the state’s housing crisis.
Not only can granny flats be an ideal option for keeping an elderly, ill or disabled loved one out of care, they also make a great place to house visiting friends and family members. Teenagers absolutely love the privacy a granny flat gives them – as do many parents! And many many homeowners see their older children return home while they save for a first home deposit in an expensive or competitive market.
Others build granny flats purely to add value and income, which can be significant and yet comes at a lower overall cost than buying an investment property. Whether you rent it out long term, or put it on Airbnb, there’s loads of potential for income. Plus, when you add one to your existing home you get to enjoy all of the benefits of its added space while you live there and then benefit again when it comes time to sell.
Analysis by CoreLogic suggests that adding a granny flat can boost the sales value of your property by as much as 30 per cent and adds around 27 percent to its potential rental income.
Local builders put the average rental return from granny flats in the Hunter Valley and surrounds at roughly $350 to $450 a week.
Before you leap into action, you still have to consider the costs which, while much lower than a whole new investment property, can still add up. The build will cost you anything from approximately $100,000 for a one-bedroom granny flat to $200,000 or more for a two-bedder.
Renting out a granny flat
Granny flats can be very attractive to tenants, particularly students or those on lower incomes, as they can be quieter and more private than an apartment, yet typically come with a more affordable rental price tag.
If you’re planning on renting out, you will need to consider this carefully when you’re planning access including entrances, gates, fences, and overall privacy from your main residence. Who is your target market? And what are renters in your area seeking?
And, if you plan on renting it out, you’ll need to ensure the electricity and water are separately metered so that you can charge for them.
Guidelines and legalities
Because NSW has deemed granny flats as having minimal environmental impact on the neighbourhood, they fall under what’s known as Complying Development, which means they don’t require a DA, but rather simply a 10-day approval process to ensure they meet the State Environmental Planning Policy 2009.
A granny flat can be attached to your home, separate from it, or even within it, so long as it meets these standards:
- It is set up alongside another dwelling (your main home) and on the same piece of land (typically in the backyard)
- It is not included as part of a strata plan or community title scheme
- It’s on a property bigger than 450m2, with street frontage of at least 12m
- Its size is no bigger than 60m2
You don’t even need to manage the build yourself, with dedicated granny flat providers and builders serving the Lake Macquarie, Central Coast, Hunter Valley and Newcastle regions.
Be sure to do your research on how the costs, services, reviews and past work of these providers compare.
Contact us today if you’d like to discuss the pros and cons of adding a granny flat to your property or if you’re searching for a new home that has one.