Since the 2009 update of the NSW State Environmental Planning Policy, residents of NSW have had a growing interest in building secondary dwellings and granny flats. It has allowed both property investors and families to capitalise on their existing land and take their property to its full potential. Building a granny flat in Newcastle and the Hunter region is proving to be a smart investment as the area grows and its demand for housing increases.

Since the approval process became more streamlined with the SEPP’s complying development certificate (CDC), building a granny flat has never been easier or more popular.

What is a granny flat/secondary dwelling?

Historically speaking, a granny flat was a self-contained dwelling for homeowners to house elderly relatives. Nowadays it can serve a range of purposes, not just for families to accommodate their loved ones, but for investment purposes or for working spaces. They are defined as being a small, self-contained living area built on the same property as an existing primary residence.

There are thousands of granny flats being constructed in Australia each year, proving to be convenient, affordable, and essential to Australia’s growing and ageing population. The construction of granny flats is showing no signs of slowing down.

How big can a granny flat be?

A granny flat has a maximum living area of 60m2 under the NSW SEPP, but external non-habitable areas can added to increase its size. For example, a double car garage 6m x 6m (36m2) can be attached to a granny flat, effectively giving the total footprint of the building 96m2. It’s a similar story with patio and alfresco areas, the sky is the limit (well, the backyard is!).

How much do they cost?

Granny flats, studios and secondary dwellings come in all different shapes, sizes, construction methods, and price tags. A single-bedroom granny flat built on-site can cost anywhere between $100,000 to $130,000 for the build-only cost (approvals and council fees excluded). With 2 bedroom granny flats costing anywhere between $140,000 to $200,000 for the build-only cost (approvals and council fees excluded). These price guides are subject to site conditions, design and selection inclusions. Granny flats are not to be confused with ‘Tiny Homes’, which are much smaller in size, constructed differently on a site, and usually built with the option of being removable later down the track, sometimes on large trailers.

How quickly can a granny flat be constructed?

A granny flat or secondary dwelling has an average build time of 12 to 20 weeks. Once your CDC has been lodged, the project can be approved in as little as 2 weeks.

Can I rent out my granny flat?

Yes! Because the NSW Government has allowed secondary dwellings to be rented to anyone, secondary dwellings have become an investor favourite. If your secondary dwelling/granny flat has been approved with a CDC OR DA, it will be issued with an occupation certificate from the certifier, ensuring it’s habitable and ready for tenants. Depending on the suburb, it can rent from $350 - $550 per week.

How many bedrooms?

Granny flats and secondary dwellings range from spacious 1 bedroom floor plans, right up to cosy 3-bedroom designs. The most common granny flat will feature 2 bedrooms. However, don’t let the bedroom number deter your ability to accommodate more people, the humble bunk bed could be a great solution to cater for the holiday accommodation market, meaning a 3-bedroom granny flat could house 2 families if required!

Benefits of building a granny flat

More space for family members to stay close, without purchasing a new property.
Low cost, fast builds.
Ability to positively gear your property by helping loan repayments.
Return on investments of 10% to 20%*
Increase property resale value
Tax depreciation benefits, further increasing return on investment.

I don’t think I comply with the CDC rules, am I unable to build one?

If your property doesn’t meet the CDC requirements, you may be able to apply via a development application. Your builder will be able to assess which route you will need to go down upon a site inspection and survey.

*Investment returns are specific to individual cases. Check with your financial advisor to find out how investing in a granny flat will benefit you.

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