Go Granny!

Parts of Australia are becoming increasingly granny flat friendly for investors.
Only five years ago, the rules on who could build and occupy granny flats were restrictive –granny flats could usually only be occupied by actual grannies (or other dependants).

Now Western Australia and the ACT have joined pioneer New South Wales in loosening the rules so it’s easier to build a granny flat, and the resulting home can be rented out to anyone.

Building a granny flat can turn a negative cash flow property to positive – however experts warn that it is a strategy best used by long term investors as the flat could cost more to build than it adds in value to the property.

The ACT recently increased the allowable size of granny flats from 75sqm to 90sqm – large enough for a comfortable two-bedroom dwelling.

RentCover General Manager Sharon Fox-Slater said granny flats could provide attractive returns for investors.

“When doing the sums, you can count on two lots of rent from a single block of land. Bear in mind, that two tenancies are involved so you’ll need two landlord insurance policies,” she said.

When assessing a possible investment for its granny flat potential, bear in mind:
  • Outdoor space – will each home have its own, private outdoor space?
  • Fencing – is the layout such that the granny flat can be fenced off? A corner block makes this much easier.
  • Parking – where will each set of tenants park?
  • Your tenant market – in a family area, reduced back yard space might make the main property harder to rent out.
Investor interest in granny flats has also sparked the recent launch of a niche website Granny Flat Finder, which lists designs from more than 50 builders.