One of the rising trends in the home property market is to add a granny flat to an existing home, making part of your own home a rental property. Contrary to the name and perhaps expectations, a granny flat doesn’t have to be occupied by your favourite granny – there are plenty of other people interested in small, affordable housing.
In today’s increasingly crowded cities, many local governments are beginning to realise that allowing people to add living areas to their existing properties can help solve the housing problems in many of Australia’s cities.
And so, that extra space that you never use could easily become a very good income earner, especially if you do your sums and your homework thoroughly before you start.
What exactly is a ‘granny flat’?
Generally, they are classed as ‘secondary dwellings’. Local council regulations are far more flexible than they used to be. Naturally, every area is likely to have different regulations, but most would cover the following:
- They can only be built on an existing residential zoned property
- Only one granny flat can be built on the property
- The block must be a minimum size of 450m2
- The owner of the granny flat must be the owner of the primary dwelling
- The maximum living space of the granny flat is limited to 60m2, not including decks, verandahs, carports etc.
- Granny flats can’t exist on the strata title, sub-divided or a community title property
- They can’t be built on commercial property or unoccupied land
- Granny flats can either be free standing or attached to the primary dwelling
- Granny flats must have their own, unobstructed pedestrian access, so if it’s built onto your house, then you must provide a separate entrance
Maximising your granny flat’s rental property potential
If you want to build a rental property granny flat on your property, it’s important to consider what you should do to make the most of its earning potential.
The right location. If you’re building in a popular city-based area, there is a greater likelihood of finding potential interest and the income may be comparable to a 2-bedroom unit. If you’re in an outer suburb or rural location, it may be harder to find tenants.
The right builders. Get a realistic idea of the total cost involved. The popularity of granny flats has created an emergence of builders who specialise in the field – talk to several. Of course, there are no set costs, although a maximum loan of around $100,000 might be a realistic limit.
A company with the right experience will help you obtain the right council approval and appoint the right tradespeople. This is a safer option than doing it all yourself – managing all the parties and avoiding potential conflict is not to be underestimated.
The right result. Don’t try to cut corners – unless your finished granny flat is attractive, well equipped and desirable to the rental market, you won’t be able to realise the best returns.
The right mind-set. You should be aware that some headaches are inevitable. Every building project takes time and trouble, and you shouldn’t expect the process to be plain sailing all the way through.
Do your research, consult the experts, talk to local real estate agents for their advice, make sure you can afford the final bill and ensure there is a ready market for your rental property granny flat on completion.
Get all the boxes ticked and your granny flat could be one of the wisest financial moves you’ve ever made.