More than half a million homeowners across Australia’s eastern seaboard have enough space on their property to build a granny flat. This could boost home values by 30 percent and add around 27% to rental income.

Building a granny flat in Australia

Building a granny flat is becoming an increasingly compelling proposition for homeowners. Not only can it help to manufacture new capital gains, but it has the potential to generate rental income while meeting demand for more affordable housing.

The appeal of a granny flat is obvious. Adult children can use it as a pit-stop on the road to independence, elderly parents can use it as a place to age gracefully, or you can use it to earn a little extra income.

For renters on a budget, a granny flat is an attractive and affordable option. Typically, a granny flat will be rented out for less than the price of a standard apartment. Demand for granny flats can be huge in some areas, allowing young and single people to stay in their preferred areas, rather than move further afield.

With this in mind, excess land can be looked at as a pot of gold. Capitalising on this untapped potential can deliver far reaching economic and social benefits.

Here, we look at the benefits of a granny flat in detail.

Benefits of building a granny flat in Australia

1. Increase the value of your property

As long as your granny flat complies with all local council regulations, your granny flat will add value to your property. In many cases, this added value can be significant. To maximise value, consider a range of variables such as the size of your granny flat, its location, local demand and how much it costs to build.

2. Affordable investment

Building a granny flat on your existing property is going to cost you a lot less than purchasing a standalone investment property. This allows you to start your property investment portfolio without borrowing a huge amount of money. Generally speaking, you should be able to pay your granny flat off in five to seven years, putting you in a great position for further investment.

3. Extra space

If you have older children who would like to stay nearby but can’t afford to, a granny flat allows you the space to house them without your children being directly under your roof. Both parties will still have the necessary accommodation, without compromising on freedom and privacy. The same goes for ageing parents not wanting to downsize or move into a retirement village.

4. Rental income

Granny flats can be a solid source of income, even fetching upwards of $350 a week in some areas. This extra income can help you pay your mortgage down faster or can give you some extra spending money to play with. Either way, more financial freedom is a big plus.

5. More tax depreciation

Having a granny flat that you are renting out gives you extra claimables on your depreciation schedule.

Tips for maximising the benefits of a granny flat

1. Do your research

Before adding a granny flat to your property, try to determine the return you may receive on your investment. Renovating an existing building or building from scratch often comes with hidden costs, so bear this in mind and budget over what’s expected. Opting for a modular home means you know what you’re facing, however there will still be ongoing maintenance costs and weeks where your granny flat may be untenanted.

2. Ensure compliance

It’s essential that your planned addition is fully compliant with all the relevant laws. Check with your local council to find out what regulations apply. As a general guide, your granny flat should be built on a property that’s at least 450 square metres in size and zoned for residential use. It should be the only granny flat on the property. Maximum living space is generally 60 square metres, not including carports, verandahs and patios.

3. Build sensitively

Your granny flat should be consistent with your home and not look like too much of an afterthought. It’s also essential that your granny flat doesn’t dominate the garden or take up all of your outdoor space. Build sensitively and pay attention to detail and landscaping so that your main home keeps it original appeal.

A granny flat for everyone

A granny flat solution works for almost everyone, whether you’re asset-rich but cash-poor landowners, or newlyweds trying to break into the market. Getting a granny flat approved is often a swift and easy process, with many granny flats approved in as little as ten days. Comply with the conditions set down in your local council’s policy and you may not even need to take it to council!

In terms of style, granny flats have gone far beyond the once common converted garages. Today you can choose from hundreds of stylishly appointed granny flat options, including one, two and three bedroom residences. The greater flexibility, the more appealing they become.

Ready to design an affordable and stylish granny flat on your spare land? Download our brochure and arrange a free consultation. With 23 years experience and more than 50 designs to choose from, we can cater for your every need.

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