Does A Granny Flat Add Value To Your Property?

The humble granny flat is making a comeback – and NSW is leading the way.

Property owners are looking to secondary dwellings to generate rental income, make their living space more versatile and add value to their property.

Here’s what you need to know if you’re thinking of adding a granny flat to your property.

Granny flat. It’s a funny term, said to be adapted from Victorian times in England when a widow moved out of the main house to a smaller residence on the estate to make way for the family heir.

Today, granny flats are put to a range of uses, as rental properties, home offices, art studios and extra accommodation for visitors, relatives, teens and, yes, grannies.

This versatility, along with more relaxed planning regulations across many states, has increased the appeal of granny flats.

Some property experts believe they could even help ease the housing affordability crisis.

NSW leads the way as the granny flat state

More than 10,000 granny flats were built across Australia in 2018, according to the Housing Institute of Australia (HIA).

NSW led the way, accounting for 6,065 – or 60% – of these new additions.

The HIA attributes this to a favourable planning environment in NSW, which allows granny flats to be built without a development application and rented out to third parties.

“Granny flats could well become an increasingly important part of Australia’s housing mix,” the HIA says.

Core Logic and Archistar have identified more than half a million properties on Australia’s eastern seaboard with the required space to build a granny flat.

As Australia’s largest regional economy and the largest growth centre in NSW outside the Sydney Basin, the Hunter region is well-positioned to capitalise on a granny flat boom.

Is it worth the expense?

The addition of a granny flat can be a lucrative investment.

Core Logic’s analysis says granny flats can add 30% to the value of a home while increasing rental income by 27%.

Local builders put the average rental return from granny flats in the Hunter Valley at between $350 and $450 a week, so an investment of $100,000 can potentially be paid off in four or five years.

“Building a granny flat is becoming an increasingly compelling proposition for homeowners,” says CoreLogic’s Head of Research, Tim Lawless.

“Not only can it help to manufacture new capital gains but it has the potential to generate rental income while meeting demand for more affordable housing.”

How to check if your property is eligible

The NSW Government’s affordable rental accommodation legislation allows homeowners to build a granny flat of 60 square metres on a property of at least 450 square metres.

If your property meets these requirements, your granny flat can be approved within 20 days as a complying development, according to the NSW Department of Planning.

Your local council is another good source of information and there are plenty of builders in the area with expertise in granny flats. Of course, our team is always happy to assist you with any inquiries.

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