If you have underutilised space on your property and are at a loss for how to put that space to its highest and greatest use, you should know that many fantastic options are available.
You should give some thought to creating something that the youngsters can play with or landscaping this area of the yard.
When it comes to increasing the value of a property, one project that has shown to be fairly popular time and time again is the construction of a granny flat or in-law apartment.
When you wish to make additions or changes to a piece of land, one of the most major problems you can face is navigating the bureaucracy that is involved in the process.
One of the most prominent reasons for delays is bureaucratic inefficiency.
The procedure of preparing applications for licences and securing authorisation from local municipalities may be an expensive and time-consuming endeavour. In contrast, the process may be rather uncomplicated if a granny flat is involved.
The construction of a granny flat is presently a lot less difficult than it ever was in the past.
The federal government passed new rules in 2009 that made it far easier for investors to build granny flats than it had ever been previously.
Before you go ahead and build your own granny flat on your property, it is important to consider all of the potential benefits and drawbacks of having a granny flat linked to your home.
What Is A Granny Flat? And Does A Granny Flat Add Value?
A granny flat is a dwelling that is located on the same property as the major residence but is totally self-sufficient and operates independently from the main house.
The vast majority of granny flats have a bedroom, a bathroom, a kitchen, a living room, and a laundry space. Some homeowners even construct granny flats on top of their garages or in the backyards of their properties.
Despite this, you shouldn't allow the label "granny flat" discourage you from staying there.
They are not limited to a particular age group or demographic in any way.
Granny flats are currently enjoying a surge in popularity among younger investors as a means of increasing the value of their properties through the use of both short-term rentals and extended lease agreements.
This trend can be attributed to the fact that granny flats offer a variety of rental options.
How Granny Flats Can Add Value to Your Home or Investment
A granny flat can boost your home value by 30 %
The qualities of your property as well as the type of granny flat that you decide to build on it will both play a role in determining the amount of value that a granny flat will bring to your primary residence.
According to the conclusions of the 2019 Granny Flat Report that was done by CoreLogic and Archistart, it has the potential to contribute somewhere in the neighbourhood of 27 percent to rental revenue while simultaneously enhancing the value of the property by 30 percent.
Nevertheless, it is of the utmost need to exercise caution and make sure that you are not abusing the space that is given in any manner.
You do not want to build a granny flat that consumes the bulk of your land or takes away every last piece of the existing green space that you have.
Consider if an interior or an external building will function better on your property, and then proceed based on that decision.
Alternatively, you might make one out of an area of your garage or the area beneath your house that is unused currently. Are you interested in shared accommodations?
There is no need to search any further! When working with MJS Construction Group, you will find yourself in capable hands.
A granny flat can increase rental yields by 27%
It is possible to make additional income by renting out the space within a granny flat, which is one of the most significant benefits of owning a granny flat.
By renting out your granny flat, which will significantly boost the amount of rental income you receive, you stand a good chance of making a tidy profit.
In addition to this, it has the potential to be a comfortable room for your spouse's parents or your children to use if they ever need to stay over at your house.
For instance, if you constructed a granny flat on your property in a nice area for a total cost of one hundred thousand dollars, you may be able to charge as much as four hundred dollars per week for rent.
This is based on the assumption that the location is very desirable (or more in places like the Northern Beaches of Sydney).
According to CoreLogic-RP Data, this is only a smidge lower than the median rent across all of Australia's capital cities for the September 2019 quarter, which was $435.
This is only a smidge lower than the median rent across all of Australia's capital cities. This figure is merely a hair's breadth below the median rental price.
The addition of a granny flat to a home can frequently result in an increase in that property's value.
After verifying with the local council that you are permitted to rent it out, consult with local experts about the numerous methods by which one might potentially raise the worth of your property and your financial condition.
This step should be taken after you have completed step 1.
Tips To Get The Most Value Out Of Your Granny Flat
When investing in real estate, it is essential to implement strategies that add value in order to achieve capital growth and to enhance the cash flow of one's portfolio.
Including a granny flat on your property is one method to raise the value of your house, and if done correctly, it may also help you amass money in a more expedient manner.
The process of adding value to your property by constructing a granny flat is a relatively straightforward operation, and it has the potential to significantly increase both the value of your property as well as the amount of rental income you receive.
You may find that the income from the rental property is helpful in maintaining your servicing capacity with lenders and moving forwards with the acquisition of your subsequent property thanks to the income from the rental property.
It makes perfect sense to create two incomes from a single piece of real estate by renting it out in both residential and commercial capacities.
If building a granny flat on your current property is either not permitted or not viable due to zoning restrictions, you might want to look into the possibility of purchasing a new one instead.
Establish communication with the right buyers' agent in order to seek the land parcel that possesses the dimensions and qualities that are acceptable to the neighbourhood council.
Your goal is to find a land piece that meets these requirements.
Keep in mind that these are highly coveted real estate possibilities, which might make it difficult to locate them in the first place.
A broker can help with construction finance for your granny flat
Getting the financing authorised before acquiring a home that might house a granny flat is a good idea. This can be done by speaking with a broker or a financial strategist before making the purchase.
Because there is a lot of competition for granny flats, the first thing you should do before you start shopping for a property is get the process of having your loan authorised.
This should be done before you look at any houses.
If your financing has not yet been approved and there is another bidder ready to acquire the property, there is a chance that you will not be able to move quickly enough to secure the property.
If this is the case, you will lose out on the opportunity to buy the home.
If you do not intend to pay for the extension out of pocket, you should confirm with your lender that they are willing to provide construction finance for a granny flat.
You should also check that you have sufficient capacity for financing to ensure that you will be able to acquire the granny flat with the necessary money.
Before submitting your application for the initial loan, you have the option to have your broker or financial strategist evaluate your additional borrowing capacity. This may be done so that you are better prepared.
Investing a little bit more will ensure a profitable return on your rental property.
Granny flats that are poorly positioned or constructed might not be able to attract a decent tenant or provide a reasonable rental return.
If you want an investment of excellent quality, you need be prepared to spend a little bit more.
Due to the fact that they are mobile, granny flats built on stilts or piers may not be included in the appraisal of a property even though they are more affordable.
In most cases, builders of granny flats would construct the dwellings on top of a concrete slab; however, piering may be necessary on your land if it has any slopes.
The Benefits of Building a Granny Flat
- You may be able to generate additional rental income from your investment property by constructing a granny flat in the backyard or elsewhere on the property. This has the potential to be an excellent money generator for you.
- Depreciation: If you rent out a granny flat, you may be eligible to claim an extra amount on the depreciation schedule that applies to your property.
- The construction of a granny flat on your property may lead to an increase in the value of your property; however, you may find that this gain is not as large as the cost of producing the granny flat. This may be the case if you decide to sell your home after the granny flat has been built.
- Spreading out the risk of a drop in revenue is important because if you have one investment property and it stops producing money, you won't have any other source of revenue. On the other hand, if there is a granny flat on the property, it is quite unlikely that both apartments will be empty simultaneously.
- To accommodate the needs of your family, you might want to consider building a mother-in-law suite or a granny flat at the back of your property. This type of living space is commonly referred to as a mother-in-law suite. It could provide suitable housing for your teenage children, your grandmother, or even your mother-in-law.
The Risks When Building A Granny Flat
It could cost more than you expect
You face the chance of encountering cost overruns whenever you establish a granny flat, just like you would with any other sort of home renovation or building project. This is something that you should be aware of.
Not all councils allow granny flats. The Risks when building a Granny Flat
Even if it is a lot simpler to obtain the authorisation of the local council to construct a granny flat in today's day and age, you still need to make sure that everything is in place before beginning construction on the granny flat.
Check things like the minimum size of the needed block, the required access, and the maximum distance that it may be erected from a fence. These are some of the things you should look at.
In general, those councils that allow granny flats are not in high capital growth areas
It is quite probable that you will only be able to use this strategy in more rural and economically challenged locations.
These are the types of locales that, on average, create slower rates of appreciation, so they are ideal for using this strategy.
The cost of constructing the granny flat doesn’t always add sufficient value to the property
The banks estimate that the value of your home will improve by just $75,000 to $80,000 as a result of the addition of the granny flat, despite the fact that you will most likely spend between $100,000 and $120,000 on it.
To put it another way, there is an excessive amount of capitalisation in what you have written.
You’ll reduce your resale and rental market potential
This is because the finished product has a restricted market and very low demand from owner-occupants as well as tenants.
As a result, the market for it is rather small.
The majority of owner-occupants would want to have all of their living space inside the same roof as their primary property, which is why they do not desire a granny flat in their backyard.
There is a greater possibility that investors may be interested in purchasing your house. You'll encounter more extended vacancy periods.
Additionally, the vast majority of tenants do not want another renter in their backyard, nor do they want the noise or the nuisance that comes from having an adjacent property.
Have a look at the several dual occupancy builders that we have available and decide which one would work best for you.
You’ll experience more extended vacancy periods
You will have a smaller pool of potential tenants to choose from for both of the properties, which means you will have fewer options when making your selection, more extended periods of vacancy, and it is likely that you will have to deal with two sets of lower socio-economic tenants rather than a single family with an average socio-economic status.
This is because the pool of potential tenants will be smaller because there will be fewer people looking to rent the properties.
Buying Or Building A Granny Flat
As the difficulties associated with housing affordability continue to weigh heavily on individuals in Australia's major cities, it is becoming increasingly difficult to find an inexpensive rental home that requires little upkeep and is located in a desired area.
Keeping this in mind, constructing a granny flat on your property might end up being a fruitful approach to maximise the use of the space you already have and boost the amount of money you bring in.
It is usual practise to refer to granny flats as "secondary dwellings," which denotes that they are built on the same piece of land as the principal residence.
This is because granny flats are typically erected on the same piece of land as primary residences. Granny flats are also known as self-contained residences.
This alludes to the fact that these dwellings have their own entrance and bathroom, kitchen, bedroom, and living space.
When it comes to incorporating a granny flat onto your property, there are a few different approaches that you can take, such as erecting a freestanding structure in your backyard or constructing a supplementary house as an extension above the garage.
Both of these options are viable options to consider.
It is essential that you keep in mind that the granny flat will need its own entrance in order to comply with the requirements, regardless of where you decide to add it.
This is something that you should keep in mind at all times.
What Rules And Regulations Need To Be Considered?
Concerns about the availability and expense of housing have driven governments in a number of Australia's states and territories to implement legislation that makes it simpler to construct granny flats.
This is in response to the housing crisis that has been plaguing the nation in recent years.
The governments of Western Australia, the Northern Territory, Tasmania, and the Australian Capital Territory (ACT) allow their citizens to rent out granny flats to make additional income.
This is in addition to the state of New South Wales (NSW), which is the only state in Australia that does not allow this.
Unfortunately, the states of Queensland, Victoria, and South Australia do not currently allow this type of activity to take place inside their jurisdictions.
Before beginning construction on your own modular granny flat or purchasing one that has already been constructed, it is essential to ensure that your intended extension will be in full compliance with all of the applicable legislation.
This should be done before you begin construction on your own intended extension. You need to get in touch with the local council in your region if you want to find out what the laws and guidelines are that apply in that specific location.
On the other hand, as a general rule, your granny flat will be required to have the following:
Be constructed on land that has been designated for residential use by the local government.
- Be constructed on a piece of land that is at least 450 square metres in size.
- Have the distinction of being the only granny flat on the site
- Be owned by the same individual as the principal residence that is located on the land.
- Have a living space that is no more than around 60 square metres (this figure varies and typically does not include verandahs, carports and patios)
- Provide pedestrians with access that is distinct and unimpeded.
- Once you have concluded that your project will be able to meet all of the standards, you can submit an application to your local council to receive permission for the project's planning.
How Much Does It Cost To Add A Granny Flat?
The amount of money it will cost to build a granny flat into your existing home might vary greatly depending on the layout of the granny flat that you choose to build.
However, as a general guideline, you should anticipate on spending at least one hundred thousand dollars (or somewhere around that amount) to get the new house ready for occupancy.
If you are considering building a house, you have a great deal of leeway in deciding what sort of floor plan and architectural style would best suit your needs and preferences.
Your choice may be influenced by several factors, including your finances, the designs currently on the market, and the amenities you intend to include in the granny flat.
Prefabricated and modular homes, in addition to residences that are built from the ground up, are all examples of possible housing solutions.
The cost might go up to more than 120,000 dollars if you want to add a granny flat to your home as part of a renovation or expansion project.
In addition to money to cover any existing or potential concerns, such as asbestos, you will need to include in your budget the cost of engineering and maybe the services of an architect.
Have you been giving any thought to giving your house a facelift?
There is no need to continue looking any further! In the event that you require the assistance of a dual occupancy builder in Melbourne, MJS Construction Group is here to be of service to you.
Tips For Getting The Most Out Of Your Granny Flat Investment
- Conduct some kind of research. Before you go ahead and build a granny flat on your property, you need first determine whether or not doing so would result in a return on your investment. Before making a final choice, it is essential to consider the laws enforced by the local council, the demand for rental properties in your location, and the cost of building a granny flat.
- Get Quotes. Obtaining accurate quotations for the cost of the building from a number of different builders and contractors is the best way to obtain a clear picture of how much it will cost you.
- Options available besides acquiring a loan. If you need to borrow money in order to support the purchase of a granny flat, speaking with a mortgage broker about the many different financing options that are available to you is a good first step. If you have a significant amount of equity in the property, one option for obtaining the cash you want is to either increase the amount of your current mortgage or refinance
- it. If this option is available to you, go ahead and investigate it.
Adding a mother-in-law or other type of apartment to a property that is being held for investment purposes. In addition to adding one to your own house, which is the method that is used the most frequently, you may build a granny flat on an investment property as well. This is the method that is most commonly utilised. If this is the case, you will need to consider the costs associated with maintaining two homes, the potential revenue that may be generated from renting them out, and the effect that adding a granny flat would have on the demand for the principal property.
- Be consistent. If you want the granny flat to add value to your home, you need to make sure that it has an appearance that is consistent with the rest of your house and does not give the impression that it was added as an afterthought. It is also very important to make sure that the granny flat does not use an excessive amount of outdoor space and does not take up the majority of the yard.A granny flat may be a profitable investment if you have sufficient room on your home and the suitable location. Be sure to investigate the many investment opportunities available to you and have a better understanding of the associated risks before making a decision about whether or not this is the best investment choice for you.
- This type of accommodation is frequently referred to as a "granny flat."
- However, before you make a meeting with your builder, there are a few questions that you will need to ask and some research that you will need to carry out in order to assure the success of your project.
- Depending on how you currently live in your home, you may be required to obtain clearance and approval from the local council before you can begin construction on your granny flat.
- Pay the building and planning department of your local council a visit and ask for their advice after getting their feedback.
- Have a discussion about the various options with your community council, since there are a lot of laws and regulations that need to be followed before you can get started.
- Types of Granny Flats Detached Granny FlatA detached granny flat is a standalone secondary housing that may be utilised as an income property.
- Building a detached granny flat can be an excellent choice for use as an investment because it provides a separate entrance from your primary residence and, in most cases, a fence that divides the two buildings, so the level of privacy enjoyed by your family or tenants is increased.
- A granny flat on the property that is linked to the main home is joined to the main house, and its design is intended to blend in perfectly with the design of the main house.
- The lack of an interior entrance door between the main house and any connected granny flats is the second crucial component of the concept for these buildings.
- This door would connect the main house to the granny flats.
- It is essential for the granny flat to have its own own separate entrance to the home.
- Granny flat with GarageDid you know that it's feasible to build a granny flat that connects to an existing garage?
- This makes it conceivable to join a garage to a granny flat.
- The construction of two-story granny flats is gaining a lot of traction as a result of the growing awareness among families and investors regarding the potential benefits of having one of these dwellings located in their own backyard.
- Two-story granny flats can be available in a variety of forms and sizes; but, much like single-story granny flats, they are restricted to an interior usable space of no more than sixty square metres.
- It is feasible to have a 60 m2 granny apartment on the second storey of a two-story granny flat that also includes a double garage on the bottom floor of the property.
- If you do not need a parking spot for the main house, we will not be able to create the privacy wall.
- A studio granny flat is considered an addition to the main house, despite the fact that it is a separate building from the main house.
- The construction of a studio apartment or a granny flat is an excellent option to take into consideration if you work from home and wish to develop a small home office or a house for an extended family.
- It is common practise for the criteria of the council to demand a minimum amount of land area to be satisfied before approval may be granted.
- It's likely that you think the space is sufficient in size for your needs.
- Before going on to the next step, you are required to first consider any restrictions about measurements that may be enforced by the state or territory.
- The following is a condensed description of the minimum and maximum measurement requirements that are imposed by each state.
- It's possible that Australia has certain conditions to meet.
- In the state of New South Wales, the individual's property needs to be at least 450 square metres in size before the individual may build a granny flat on their land.
- The construction of granny flats in Queensland The allowable floor space for granny flats in Queensland cannot exceed 80 square metres in total.
- This is the largest size that is permitted by the state.
- The maximum floor size that is permitted for granny flats in Western Australia is capped at 70 square metres, as stated by the relevant regulations in that state.
- South Australia is home to a number of Granny Flats.
- In South Australia, detached residences must have a floor space that is no more than 50 square metres and are not permitted to include a full kitchen or laundry room.
- This is the case with granny flats in the state of Victoria.
- In the Australian Capital Territory, a granny flat can have a maximum of 70 square metres in terms of its gross floor space.
- In order to be eligible for occupancy in the accessory housing unit, additional parking space is required, and the occupant of the accessory housing unit must either be providing care to or receiving care from a resident of the primary house in order to be eligible for occupancy in the accessory housing unit.
- In the Northern Territory, the maximum allowable floor space for granny flats is either 50 square metres or 80 square metres.
- The kind of zone that the property is located in will decide the maximum allowable floor size for the building.
- Things To Consider Before Building A Granny Flat It's hard to get approval to build a granny flat.
- As a direct result of this, getting clearance to construct a granny flat is now much simpler, provided that all of the required requirements are met.
- It takes a long time to get approval.
- In the states of New South Wales, Western Australia, the Northern Territory, the Australian Capital Territory, and Tasmania, the length of time it takes to acquire permissions is proportional to the size of the property for which you are seeking clearance.
- You need a lot of lands.
- The minimal amount of land that is required to construct a granny flat might vary from one local government to the next.
- The size of the granny flat doesn't matter.
- The floor area of granny flats must be fewer than sixty square metres in order to comply with the regulations.
- You have to subdivide your property.
- Building a granny flat does not allow for the real subdivision of your land, provided the subdivision is already permitted under a municipal planning scheme.
- The granny flat has to be detached from the main dwelling.
- In addition to the potential of constructing a freestanding residence on your land that is completely different from the major house, there are a range of additional building forms that can be examined and are available for consideration as well.
- No one wants to rent a granny flat.
- A granny flat is a fantastic possibility for rental income and should not be overlooked.
- You can't use a granny flat for investment purposes.
- As a consequence of regulatory laxity, homeowners in New South Wales, Western Australia, the Northern Territory, the Australian Capital Territory, and Tasmania are now allowed to rent out their granny flats and receive an income from doing so.
- A granny flat is just a cheap, low-quality kit home.
- Even though there are a number of kits on the market that contain everything you need to build a granny flat for a low price, this does not mean that purchasing one of these kits is the only option you have available to you.
- You have the option of going with a granny flat that has been carefully planned architecturally so that it merges in perfectly with the main home.
- This is something you should consider depending on what your needs are.
- It's hard to get finance.
- Because not all banks and other financial institutions are aware of the shifting requirements that are linked with your living conditions, it is essential to choose a lender who has expertise providing financing for granny flats.
- They have an obligation to make it possible for you to secure finance in the form of a construction loan or to make use of the equity that you have built up in your property so that you may build a granny flat.
- 450 square metres is the bare minimum amount of area that must be present on a property in New South Wales (under complying development).
- In spite of this, Development Applications might be approved for lots of a smaller size, and the maximum size of a house that can be built is 60 square metres (in most cases).
- In some scenarios, according to Clause 5.4 of the Local Environmental Plan, the local council may have the ability to provide you with a more appropriate alternative for the size of your granny flat.
- This may be the case in certain situations.
- Who Can Live In A Granny Flat?If you reside in Melbourne, Brisbane, or Adelaide and you thought that adding a granny flat to your home would be a fantastic way to enhance your cash flow, you might want to rethink the notion of adding a granny flat to your property.
- There are a few reasons why this might not be a good idea.
- You have a greater variety of alternatives to choose from if you live in New South Wales, Western Australia, the Northern Territory, the Australian Capital Territory, or Tasmania, which are all regions in Australia where it is typically acceptable to rent out your second property.
- The results of a study that was conducted by Gateway indicate that just 23 percent of the country's granny flats are now being used to generate money through renting of their spaces.
- The cost of building a granny flat might range anywhere from $20,000 to over $200,000 depending on the size and specifications of the dwelling.
- It is possible for the cost of a granny flat to fluctuate depending on the goal that you have in mind for the residence as well as the level of quality that you want to attain.
- The addition of a granny flat can confer a number of advantages.
- This, in turn, has repercussions for the arrangement of the residential building's floor plan.
- Residents frequently build granny flats in order to raise the overall value of their homes and to expand the pool of potential tenants for such properties.
- This has the potential to be an extremely lucrative investment, and it also has the potential to result in improved cash flow.
- To evaluate whether or not the amount of rent that will be charged will be adequate to pay the cost of the project, you should seek the advice of an expert.
- An auxiliary housing unit is also known as a granny flat.
FAQs About Granny Flats
The average price of building a granny flat in Melbourne ranges between $81,000 and $120,000 depending on the size of the structure.
Granny flats are growing in popularity among those who'd normally struggle to buy homes, such as some newlyweds and single parents. This is because granny flats take less time and less money to build than conventional houses.
According to the 2019 CoreLogic/Archistart Granny Flat Report, it could boost home values by 30 per cent and add around 27% to rental income.