Renovating? Don’t overlook the value of a granny flat

It isn’t surprising to see a greater number of Sydney-siders calling out for cheaper, ideally located accommodation - enter, granny flats

In recent years, granny flats have become increasingly popular with savvy home owners and keen investors.

With property prices and rents rising in many of the major capital cities, many Australians are struggling to find affordable and comfortable accommodation.

In Sydney, prices surged 3% in March alone – taking the dwelling value growth for the capital city to 13.9% over the last 12 months. And, at the same time, rents have risen by 2.1% to $490 over the last 12 months.

So it really isn't surprising to see quite a few Sydney-siders calling out for cheaper, ideally located accommodation.

Enter granny flats.

Granny flats are a smaller self contained structure (limited to 60 square metres) that are either a part of your main house or a completely separate structure.

Over the last few years, there has been a jump in the number of home owners and investors erecting granny flats in their backyards. Savvy homeowners are realising that granny flats are no longer just for grannies. In fact, they are a great way for Australians to build a tidy additional income.

Better yet, with so many granny flat styles and designs on the market, a granny flat no longer has to be a makeshift rumpus room attached to the house. Today, they can be entire homes on the same block of land as the primary home.

Of course, if you are thinking about building a granny flat for investment purposes, there are some key things to consider first, including:

Legal requirements:

The first step is the most logical one - can you legally have a granny flat? Regulations regarding construction and occupancy vary from state to state and council to council, so it pays to do your due diligence and make sure you are working within the right parameters. Local governments have started to realise the benefits of granny flats for home owners and renters alike, and so have started to make the path to approval much simpler.
Often councils will require you to have a certain sized block (say over 550sqm) or dual access to the block - but remember every council could be different. It's important to make sure you have the approval for the granny flat before starting any of your project - retroactive approval can be exceptionally challenging.


If you're looking to finance you're new granny flat, it's best to chat with a mortgage broker to find the right option. Generally, lenders wwill allow you to use equity that you've built up in the main house on the property to finance the addition.

Some lenders may restrict the loan size for a property that is set to be built on land when you already have another house there. So to make sure you're on the front foot and know all of your financing options, make sure you speak to your local Mortgage Choice mortgage broker.

Planning your services:

Before erecting a granny flat in your backyard, it is important to know exactly how you plan to connect the storm water, sewer, water and electricity to the dwelling. Often connecting the various services to a granny flat is the most complicated and expensive part of the entire process, so make sure you know what you are getting yourself in for before leaping in feet first.

Endless opportunities

Granny flats are not only an excellent way to supplement your income, but also provide a huge amount of other opportunities. Whether you're looking to move the kids into a teenagers retreat, build yourself an at home office, bringing you elderly family a little closer or simply making some extra money with rent - a well planned granny flat could be a great decision.

Image courtesy of - GrannyFlatApprovals

Posted in: Renovating