Known by other names as auxiliary housing units, granny flats are self-contained living spaces built on the same property as a primary residence.
They offer various advantages, including additional rental income, housing for elderly family members, and increased property value. These units can be a more affordable housing option in areas with high real estate prices and offer flexibility for multi-generational living.
However, there are also downsides, such as the cost of construction, potential zoning restrictions, and the impact on privacy and outdoor space. It’s important to balance the benefits and drawbacks while considering adding a granny flat to a property.
Let’s get straight to the point.
Known by other names as auxiliary housing units, granny flats offer flexibility, additional rental income, and increased property value. They can accommodate family members, provide separate workspaces, or serve as multi-functional areas.
While these units enhance property appeal and offer potential revenue, they also present challenges, such as the cost of construction, complex approval processes, potential capital gains tax, and limited buyer interest.
Careful planning, professional consultation, and thoughtful design can help maximise benefits while navigating downsides. Granny flats are a valuable investment for many homeowners, offering long-term versatility and financial advantages.
The Pros Of Building A Granny Flat
Granny flats come with numerous benefits that make them appealing to homeowners. Let’s explore the key advantages.
1. Increased Flexibility
- Accommodate Family Members: Traditionally, granny flats were designed to house elderly relatives, allowing them to live close while maintaining their independence. Today, they are also used to house adult children who need a stepping stone before purchasing their home.
- Multi-functional Spaces: Beyond secondary residences, granny flats can be used as home offices, art studios, or guest houses. This adaptability makes them an attractive addition for many homeowners.
2. Improved Work-Life Balance
- Separate Workspace: As remote work becomes the norm, having a dedicated workspace separate from your main house can significantly improve productivity. A granny flat offers the perfect solution, providing a quiet space to work without the distractions of family life.
- Customisable Design: You can design your granny flat to suit your work needs. The possibilities are endless, whether you need a quiet office, an artist’s studio, or a gym.
3. Potential Rental Income
- Generate Extra Revenue: One of the biggest advantages of owning a granny flat is the potential to rent it out, either short-term or long-term. This can provide a steady income stream, making the flat valuable.
- Low Vacancy Risk: In areas where housing is in high demand, granny flats can attract tenants easily, ensuring you have a low vacancy rate and a reliable income source.
4. Increased Property Value
- Boost in Capital Value: A well-designed, custom-built granny flat can significantly raise the value of your home. While the initial construction cost can be around $130,000, the return on investment can be substantial if the flat enhances your property’s overall appeal.
- Appeal to a Broader Market: Properties with granny flats tend to attract more buyers, including those looking for multi-generational living spaces or additional rental income opportunities.
The Cons Of Building A Granny Flat
While granny flats offer numerous advantages, there are some downsides to consider before embarking on this project.
1. Capital Gains Tax
- Tax Implications: When renting out your granny flat, you may be liable for capital gains tax when selling the property. This tax applies to the portion of the property that generates income, and it’s important to consult with an accountant to fully understand the financial implications before renting out your flat.
- Impact on Home Office Deductions: Using a granny flat as a home office and claiming expenses on your tax return could also trigger when selling your home. Therefore, it is professional advice to navigate these potential tax liabilities.
2. The Approval Process
- Lengthy Permitting Process: Building a granny flat requires council approval, which can be lengthy and complex. You must ensure your plans comply with local building codes and zoning regulations.
- Possible Restrictions: Some areas may have specific restrictions on the size or location of granny flats, limiting your design options. Consulting a professional builder or architect experienced in Local laws may facilitate an expedited approval procedure.
3. Potential Difficulty In Selling
- Niche Market: While a granny flat can increase your property’s value, it may also narrow your pool of potential buyers. Some buyers may not see the flat’s added value, or they may not need the additional space.
- Valuation Challenges: Accurately determining the value of a property with a granny flat can be challenging, especially in areas with few comparable sales. This can complicate the selling process, so it’s important to consult with a real estate agent with property experience, including secondary residences.
Tips For Maximising The Benefits Of A Granny Flat
To make the most of your granny flat, here are a few tips:
- Consult Professionals: Engage with architects, builders, and real estate agents with experience designing and constructing granny flats. Their knowledge will guarantee the greatest result for you.
- Consider Future Use: While your current plan for the granny flat might be to accommodate a family member or serve as a home office, think long-term. A granny flat’s flexibility allows for a wide range of uses over time, so design with the future in mind.
- Plan Your Budget Carefully: Building a granny flat can be a significant investment, so it’s important to have a clear budget. Get quotes from various contractors and factor in additional costs, such as landscaping or furniture.
Conclusion
Granny flats offer homeowners a flexible and valuable addition to their property. Whether you’re looking to provide a living space for family members, create a dedicated home office, or generate rental income, a granny flat can serve multiple purposes and enhance the overall value of your home.
However, before proceeding, it’s essential to consider the potential downsides, such as tax implications and the complexity of the approval process. By carefully assessing the benefits and drawbacks and seeking expert advice, you can decide whether building a granny flat is right for you.
Ultimately, the flexibility and long-term benefits often outweigh the challenges, making a granny flat a wise investment for many homeowners. Granny flats are a growing trend in Australia, and with proper planning, they can significantly improve your property’s functionality and value.
Frequently Asked Questions About Granny Flat
What Is The Proper Term For A Granny Flat?
Secondary suites are self-contained apartments, cottages, or small residential units situated on a property with a separate main, single-family home, duplex, or other residential unit. They are also called accessory dwelling units, in-law apartments, granny flats, and garden suites.
Can You Join A Granny Flat And The Main House?
The owner of the granny flat must be the same as the owner of the main home. The granny flat can only take up the maximum allowed for the primary dwelling.
How Close To The Boundary Can I Build A Granny Flat?
Maximum building height of 8.5m, although setbacks change once building height exceeds 3.8m. The property must have residential zoning. 3m setback from the rear and 0.9m from the side boundaries.
Who Lives In Granny’s Flat?
A granny flat (sometimes called an in-law apartment) is a smaller space originally designed for live-in nannies, elderly relatives, and visiting guests. Granny flats are commonly added as separate units in the property’s backyard; however, if necessary, they can also be built to be connected to the main house.
How Many Meters Is A Granny Flat?
Generally, a granny apartment can be built up to 40 square metres, and a granny flat can be constructed with a maximum area of 50 to 100 square metres.
