Granny Flats – How Do They Rate as an Investment?

with 17 Comments

Granny Flats have been in the news more so in the past 12 months or so than they have been for a long time. Much of this “news” relates to them being offered as an “investment” rather than housing your Granny. Traditionally that’s specifically what Granny flats were meant to do – viz: provide a safe secure place of residence for an aged loved one / family member adjacent to the family home, but these days it’s more about investment and maximising rental cash flow for property investors.

The Big Questions about Granny Flats?

For investment purposes people want to know just a few things as follows. The answers to these questions will vary from one Council to another.

  • Can I legally rent them out to anybody? Or is it only for blood relations?
  • How big can they be? E.G how many bedrooms or square metres are allowed?
  • Are they allowed on my block of land? Is there a particular zoning that is required?
  • Can I subdivide a granny flat off the main house?
Traditional Granny Flat
A Traditional Granny Flat

Granny flats have always been somewhat limited in size and had other limitations which varied, depending on local Council planning regulations. These regulations have changed a good deal too in recent times (and continue to do so) and vary from one Council jurisdiction to another. In other words what may be perfectly acceptable at one address may not be at another. Some councils are encouraging them whilst others are not so keen as you will see from our list below.

Other Important Considerations – questions you may have:

  • Subdividing Land for Profit – 4 Key Steps
  • Subdivisions versus Splitter Blocks – there is a big difference – what is it
  • Why bother with a site plan? – A must read if considering building a granny flat
  • Difficult Building Sites – just one case study of many we handle
What’s in a name? Is it Dual Key, Dual Occupancy, Dual Dwelling or Dual Living?

These days Granny Flats are being seen and promoted in a new light as an investment package often styled as “Dual Key” or “Dual Living” or “Dual Dwelling” or simply just “Granny Flats”. These are not necessarily to be confused with “Dual Occupancy”. The reasons (read more here) for this are many and varied and are often quite valid and make a good deal of sense. As an investment they can also make a good deal of sense too, provided one is appraised of the local planning laws in relation to the property that you are actually buying, as they are many and varied and can impact in quite a substantial way on the performance of your investment. Questions such as “can each side be let to unrelated parties”? OR ” Is there a requirement for a fire wall between each side” OR “Do services need to be separately metered” or “Can they be strata titled?” are often asked.

If you want answers relating to your specific property please make contact with us, Granny Flats are only a small part of what we do, meanwhile, as a guide only, remembering that these things can and do change we have compiled the following list

a Granny Flat floorplan
A typical 1 bedroom Granny Flat Layout

An investigation into the ability to rent out granny flats on own tenancy agreement by Council area.

Brisbane City Council

  • Secondary units can have a GFA of no more than 70m2
  • Secondary Dwellings must be no further than 20m from the main dwelling
  • Secondary dwellings must be used by the same household group

Ipswich City Council

  • Auxiliary units as they are called can have a max GFA of 50m2 (nb: we reduced this from 65M2 since first posting)
  • Auxilliary units may be attached or detached but can contain only 1 bedroom. (changed from 2 previously)
  • Auxiliary units must be a consistent style as the existing dwelling
  • The Ipswich Plan does not dictate that the auxiliary unit must be used by one household group (for more information visit http://www.qt.com.au/news/how-two-homes-can-be-cheaper-than-one/1959778/)

Redland City Council

  • Secondary dwellings have a max GFA of 50m2
  • Secondary dwellings are located within 20m of the main dwelling
  • Secondary dwellings must be occupied by one household group

Gold Coast City Council

  • Family accommodation must have a max GFA of 80m2 or less than 50% GFA of main dwelling (depending on zoning)
  • Family accommodation must share; a driveway, water and sewer connection with the main dwelling
  • Family accommodation must be used by the one household group (family member or personal staff necessary for the health and wellbeing of a member of the main household

  

Logan City Council – (Logan city has a new town plan since this post was published – please refer to the Council – 07 3412 3412)

Logan Council is currently served by 3 planning schemes,Logan, Beaudesert and Gold Coast. Also their new draft plan closed for submissions on April 30th and changes are proposed in relation to this area –

  • The Logan PS dictates that annexed units must;
    • Be located on a site with min site area of 600m2
    • Be within 20m from the main dwelling
    • Have a max GFA of 70m2
    • Not have their own laundry
    • Be used by one household group
    • The Beaudesert PS allows a max GFA of 1000m2 and does not dictate the use by one household group
    • The Gold Coast PS dictates Family Accommodation must:
      • have a mx GFA of 80m2 or less than 50% GFA of main dwelling (depending on zoning)
      • Shares driveway, sewer and water connections
      • Must be used by the one household group (family member or personal staff necessary for the health and wellbeing of a member of the main household
      • Through discussions with a planner at LCC (Leanne) she advised that the intent is that granny flats are not leased out on their own tenancy agreements, however she also advised that LCC have not been issuing show cause notices to separately tenanted granny flats (information obtained December 2013)

Moreton Bay Regional Council –Moreton Bay is currently serviced by 3 planning schemes, Caboolture, Redcliffe and PineRivers (NB: Moreton Bay has implemented a new planning scheme since this post was published – call them on (07) 3205 0555  including after hours.

  • The Caboolture PS dictates that secondary dwellings must;
    • Not have more than two bedrooms, lounge, toilets & showers
    • Have a GFA of less than 25% of the main dwelling or 85m2
    • Be located no more than 10m from the main dwelling unit
    • Not be occupied by more than two persons
    • Be used by a member of the household group
    • Redcliffe PS
      • Must not be used by person/s who are not part of the household group
      • Pine Rivers
        • Outbuildings are not used for residential purposes
        • Through discussions with a planner at MBRC (Alan) he advised that the intent is that secondary dwellings are not leased out to parties that are not part of the household group in the main dwelling (information obtained December 2013).
A modern Granny Flat
A modern Granny Flat – on site construction

17 Responses

  1. Gary Hobbs
    | Reply

    Would like to see some info on granny flat rules for Sunshine Coast council.

    13 May 2014, Gary Hobbs

  2. Jon Day - SCM
    | Reply

    Sunshine Coast Regional Council is also implementing a new scheme. Under this new plan ‘Secondary dwellings’ must be clearly ‘ancilliary’ to the main dwelling & no more than 60m2, must share a common wall or connected by a walkway up to 2.0m in length in urban area’s or 6M in non urban. Go to http://www.sunshinecoast.qld.gov.au & click on New Planning Scheme part 9 development codes – 9.3.6 dwelling house code

    23 May 2014, Jon Day, http://www.scmprojects.com.au

  3. Luke
    | Reply

    Could anyone provide a similar summary of the Code or share their experiences with Secondary Dwellings / Granny Flats in Byron Shire? Thanks @JonDay for the above Sunshine Coast summary.

    4 Jun 2014, Luke , http://www.larccollective.com

  4. Michelle Wilde
    | Reply

    It seems irrational that BCC will not allow you to have a secondary dwelling that cannot be rented as an investment for the owner. You can rent a room in your house, but not a secondary dwelling in your back yard. Insane!

    9 Jun 2014, Michelle Wilde, http://www.stellaproperty.com.au

  5. Jarret
    | Reply

    My client recently posted a case study on their website which shows an increase of $300p/w rental income from a flat built in Waratah. You can see the case study here:

    http://www.backyardgrannys.com.au/news/property-investor-in-newcastle-gains-additional-300-per-week-by-building-a-granny-flat/

    20 Jul 2014, Jarret, http://www.backyardgrannys.com.au

  6. Adrian - SCM
    | Reply

    Yes, we are seeing similar results here for investments between $60k – $90k.

    21 Jul 2014, Adrian , http://www.scmprojects.com.au

  7. Simon
    | Reply

    “Brisbane Council have been sending out show cause notices..”

    NOTE: A lot of these notices have been appealed to the Dispute Resolution Committee and the P&E Court and Brisbane City Council has lost every case. I successfully appealed mine and now continue to rent my Secondary dwelling.

    19 Sep 2014, Simon

  8. Donald Yoder
    | Reply

    One can also have a look at some offers given by Granny Flat Solutions at http://grannyflatsolutions.com.au.

    4 Dec 2014, Donald Yoder

  9. David
    | Reply

    Has there been an update yet from BCC clarifying their stance?

    10 Dec 2014, David, http://www.buyersagentguide.com.au

  10. William
    | Reply

    Why does some people was able to build another house for selling?

    (There could be many answers to this – perhaps you looked at a Dual Occupancy that had a building units plan lodged – each individual situation needs to be considered on it’s merits)

    26 Mar 2015, William Pang

  11. Studentessa
    | Reply

    This is my first time i visit here. I found so many entertaining stuff in your blog, especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the enjoyment here! Keep up the good work.

    8 Nov 2015, Gold Cost Student

  12. Mary Hockley
    | Reply

    Can you advise if Noosa Council allows
    Granny flats on your property?
    Mary Hockley
    maryandarf@hotmail.com

  13. Damian Garnes
    | Reply

    The idea of having a granny flat in your backyard might appeal to some people – especially those looking for independent living parents or teenagers. Nice article. Thank you.
    Damian Garnes
    http://www.resbuild.com.au/

  14. avia
    | Reply

    whoah this blog is great i really like reading your articles.
    Keep up the great work! You already know, many individuals are looking round for this information, you can help them greatly.

  15. Kristina
    | Reply

    Everything is very open with a really clear clarification of
    the issues. It was definitely informative. Your website is very useful. Many thanks for sharing!

  16. Mike
    | Reply

    Very informative – thanks. I have been thinking of investing in a granny flat for the rental income, (don’t fancy the in-laws moving in!!) My cousin got into it a few years ago and makes enough to take off as he pleases, so it is tempting not that I need much convincing.

  17. […] our blog “Granny flats – How do they rate as an investment” where we disect the various rules Council by Council area around […]

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