5 golden rules for building a granny flat
Granny flats are on the rise - and they don’t just suit granny anymore.
In times of increasing rental and housing costs, this rather wonderful option can generate income or provide accommodation for dependent relatives, teenagers or adult children saving for a house - without driving you mad!
So what do you need to consider before going ahead with the build?
Attached or detached
There are two main types of granny flats - freestanding or an extension of the existing home. Choosing which one will depend on the size of your block plus the configuration of your existing house. Freestanding is totally separate and will always be separate. That is a detached building with a front door and no connection to the main home.
It offers the most privacy if you rent it out to a holidaymaker, tenant or family member. However, it doesn’t offer any flexibility and doesn’t enable you to expand your existing house.
The other option is an attached granny flat. The annex is under your main roof or attached to your existing home and there’s a link door. When that door is open it's just another living area with a bedroom and ensuite. The kitchenette can be hidden away in a cupboard so it just looks like another family room. They're the really clever ones.
It can be a guest room or kids play room, then as the kids get older or if you want an income simply lock that door, separating the property completely.
Check local council regulations
Go to the authorities from the start. Finding out what you can and can't do with the council is absolutely crucial.
There is so much legislation already and more will be introduced, especially when it relates to health and safety or taxable income being generated.
As a rule of thumb, when a property is under one title it's only allowed to have one meter. So you might be renting out that additional property but you will be paying their electricity, water bills and Wi-Fi yourself.
Get financial advice
The most important thing is knowing roughly what your property is worth now.
If you’re going to blow $150,000 building a granny flat, is that going to add to the property? In reality, sometimes it doesn’t add that much in the short term.
However, if you’re looking long term and you’re getting $250-$300 a week from a $150,000 investment that’s a fantastic return. Then in ten years time house prices will have likely increased.
Your accountant should be included in all these conversations.
Don’t think it’s tax free income - it’s not. You need to get plenty of financial advice and speak to the council to make sure you know everything is being dealt with correctly.
Consider the potential downsides
The biggest warning is don't think you can build it without a second thought. If you don't get the layout correct it could lead to tricky situations. For some people it will be a business, but privacy can become an issue.
While you may have managed to create privacy inside the home, what about car parking and the outside space? Imagine you’ve rented it out for a week to somebody on holiday and they are blocking your car in when they’ve gone out for a walk.
The same goes for outside space. When you have friends and family over for a Sunday barbecue do you want a couple awkwardly sitting by the pool? The answer is probably no. Do you even want them to access your pool?
Sectioning off garden and parking spaces is vital - or don’t provide them and be upfront. These can be negatives if you don't handle them right from the start. Make sure there are no grey areas when renting it to tenants.
Plan, plan, plan
Services are one of the most expensive things to relocate or install. Think about where your water comes in and where your sewage and drainage pipes and power sources are. You might just put a bathroom in but if it had been designed a bit better then the bathroom could be in another location and save you $10,000.
It’s about practical planning. The most successful situations are where you don't just give your property a single added benefit. You give it multiple added benefits - they're the most successful ones.
Once you’ve considered these things, you’re good to go. Rarely, almost never, do granny flats put off potential buyers when it’s time to sell. They’re only seen as a negative if they are unsightly or poorly designed.
For separate dwellings - where’s the negative? Granny flats integrated into the main house, meanwhile, can cost less to build and can be more of a value adder but your rental income won’t be as strong.