Is a granny flat the go?

The Bonus in Your Backyard

Are you are looking for extra living space? An ancillary dwelling or ‘granny flat’ can be a smart, versatile, and affordable solution for additional accommodation.

Granny flats are generally defined as being a small self-contained dwelling with a kitchen and bathroom. The structure can be attached, integrated, or completely separated from the main house.

They can be built on any block if it has no more than one existing home and the block is larger than 450m2. The building can be no more than 70m2 (or the maximum allowed by the council). Sits on the same title as the main house and is not a sub-division. And the land title does not contain any common property.

Since the change of WA planning legislation in 2013, the popularity of ancillary dwellings has grown and the number being built every year in Perth has increased exponentially. This amendment allows granny flats to be rented to non-relatives thus providing an avenue for income and incentive to investors. There is also the significant appeal for investors who can get two rents out of the one property without the long and costly process of subdividing.

There are several benefits to these dwellings including the price, the time it takes to build and their lock-and-leave appeal. If attractive and well-constructed the extra accommodation has the potential to increase the property’s value, and broaden the appeal to prospective buyers should it go on the market in the future. While it may enhance the value of the property it will generally not be equivalent to the amount spent on the build. The prime purpose of a granny flat is usually to generate income or increase space.

High property prices, rental increases, and an ageing population have all contributed to the interest in this form of property development.

Couples who work may enlist the support of their live-in parents to help raise their children. Middle-aged parents can create an autonomous space for teenagers, and empty nesters can use them for rental income.

There can be multiple uses for granny flats;

  • accommodation for live-in carer – in old age
  • aging parents/relatives – can live close by but independently
  • teenage retreat
  • hosting international students
  • art/craft studio
  • home office
  • guest house
  • entertainment/games room
  • music studio
  • gym/exercise room
  • short-term accommodation – bed and breakfast
  • long-term rental

Michelle & Chris of Scarborough built their granny flat in 2008 and have appreciated the amenity it has since provided.

“ We had a modest three bedroom home in a great location but needed more living space. With the consideration of ageing parents living interstate and two young boys we needed something that was adaptable and could evolve as our circumstances changed over the years. A separate dwelling suited our needs and was much more economically viable and less disruptive than extending or adding a second storey to the existing house. We opted for a steel frame modular construction in a style which complemented the existing brick home. The building process was relatively quick and easy.

Over the years it has been used to accommodate visiting interstate, and overseas family and friends, an entertainment room, home office and now houses two teenage sons. The State Planning changes to the residential codes in 2013 was an added bonus – as we now have the option the rent out the flat for extra income in the future.”

Simone & David of Trigg demolished their existing home and included a granny flat in their new build to accommodate ageing parents. They have separation and live independently but have the comfort and support of family close by … and it works both ways.

Granny flats can be custom-built, pre-fabricated, transportable, or even a flat-pack. It costs around $100,000 to build a one-bedroom freestanding granny flat in the Perth metro area. There are plenty of local companies that specialise in building granny flats. They will manage all drawings, approvals and construction, and can even assist in the council approval process. Make sure you do your homework before engaging a builder!

You will need to consult with the planning department of your local council before constructing a granny flat on your property to ascertain what requirements apply. The Residential Design Codes for ancillary dwellings may vary slightly in different locations. And you will need building approval to ensure that it meets the safety, health, amenity and sustainability requirements of the Building Code of Australia (BCA).

The council can also provide information on other things you should consider such as additional garbage bins, or how adding an ancillary dwelling may affect your council rates.

If you have built a flat on your property prior to 2013 you will require a new approval from the local council and get your certificate of title updated before it can be occupied by non-family members. If your home had an existing granny flat when you bought it, you will need to check with your local council or your sales documents to be sure it complies with planning regulations.

If you do decide to rent out your granny flat, it’s recommended that you and your tenant enter into a written tenancy agreement that complies with the Residential Tenancies Act. This legal framework sets out very clearly what your rights and responsibilities are as a landlord and does the same for your tenant.

Stays under three months are not currently recognised by the tenancy act. If you intend to lease out the accommodation via short-term agencies such Airbnb or Stayz you will need to check with the local council regarding planning permission and requirements.

Be aware, if you construct an ancillary dwelling behind the family home and receive rent for a number of years, you will have to pay some capital gains tax when you sell your house. Normally the family home is tax-free but you will lose capital gains tax-exempt status on that proportion of the property.

For more information please refer to the links below:

HOUSING WA – Ancillary Dwellings Fact Sheet

COMMERCE WA– Renting a Granny Flat

CITY OF STIRLING – Ancillary Dwellings (Information Guide)

Disclaimer: While every effort has been made to ensure that material in this article is accurate at the time of publishing – such material does in no way constitute the provision of professional advice. Users should seek appropriate independent research to validate.