Granny flats are no longer just for Granny.

They also work for older kids who need their own space, parents that need their own space, or those that could do with some rental income from a paying tenant.

With interest rates expected to rise, median property prices up around 12 per cent over the last 12 months, a shortage of housing and, in the case of first home buyers, incentives being wound back, the housing affordability crisis is back on many people’s lips.

Add to this combination an ageing population – one in four Australians will be aged 65 and over by the year 2056 – and it’s little wonder that State governments are scrambling to devise policy that encourages a working and flexible solution to house families. And high on their agenda is the granny flat.

A granny flat for everyone

Paul Smith, owner of Greenwood Garden Products – builder of custom-made granny flats in NSW – explains that a granny flat solution works for many people, including asset-rich but cash-poor land owners that can benefit from additional income. “You can put your children out [in a granny flat] and they still live in the area, alternatively you can rent them out,” he explains.

Andrew Young, Sales Manager at VGC Home Building Solutions in Victoria agrees. “The key advantage is the cost of the land. They already own the land, so all they’re looking at are the building costs or the infrastructure costs to create it.”

In NSW at least, the State government agrees too. The State Environmental Planning Policy (SEPP) for Affordable Rental Housing issued last year has streamlined the process of getting granny flats (or ‘secondary dwellings’) across the line, as part of their efforts to boost the supply of affordable rental accommodation. A government fact sheet on the topic discusses the need to: “create a place for those who need a space of their own, like elderly parents or those generation Y children who haven’t yet left home,” and “the chance to use a granny flat as a source of additional income in these challenging economic times.”

Getting it approved

Policies vary in every State, with differing levels of progress towards simplifying the development application process. In NSW, the SEPP claims to help families by:

  • Allowing granny flats to be approved as complying development in ten days,
  • Allowing granny flats to be built in all residential zones, and
  • Setting clear standards for the construction of granny flats.

“If you comply with all the conditions set down in the policy, you don’t even have to take it to council,” says Smith. “You go to an accredited certifier… you can get it basically approved within a couple of weeks.”

But Smith says that complying with those conditions is not always straight-forward. For example, applications for granny flats on land with acid-sulphate soil, or in a bush-fire prone area, are likely to come across difficulties in getting approved.

In Victoria, “It’s just a standard building permit,” says Young. “Down here we use independent building surveyors.” He says that in Victoria approval usually takes between two to three weeks assuming all conditions are met.

To find out more about granny flat policies in your area, a good place to start is the website of the department of planning in your State, or you can talk to a planner at your local council.

The new and improved granny flat

These days there are plenty of fully self-contained, stylishly appointed granny flat options available through building companies, ranging in price from around $65,000 for a studio cottage to $150,000 for a three-bedroom flat. A far cry from the converted garages of yesteryear.

If the addition brings extra space, greater flexibility and more living quarters to the dwelling, it’s likely to add appeal and value in most markets. “If they’re done in keeping with the existing home…If the rear unit is done tastefully and within the same sort of setup, it actually enhances the whole complex,” says Young.

Duplexes and subdivisions

Granny flats aren’t the only options for dual living. Subdividing the existing dwelling and / or land is another option to consider, but can be a different ball game altogether.

“If you’re going for a dual occupancy, you’ve got to go through the planning application,” explains Young. In Victoria, he says that this process can take between six to eight months and is a more expensive option, but the end result is a separate, saleable asset.

“A granny cottage uses all the services and infrastructure that’s already there for the initial dwelling,” he explains. “When you subdivide you’ve got to run all new infrastructure.”

Building a new dual living dwelling

The construction of a new home that includes a granny flat within the dwelling will generally go through the normal development application process with local council for a new residential building, and may be assessed in conjunction with relevant legislation pertaining to secondary dwellings.

For example, in NSW these developments are generally permitted provided:

  • The granny flat portion is a complying development under Division 2 (Secondary Dwellings) of the SEPP for Affordable Rental Housing (e.g. Maximum 60m2 floor space, on a block greater than 450m2);
  • The principal dwelling can be carried out as complying development under the SEPP (Exempt and Complying Development Codes) 2008 on its own merit. The legislation explains, “This means that the principal dwelling would be considered to be a dwelling house (a building containing only one dwelling) for the purposes of that Policy even if the secondary dwelling were within it or attached to it.”

A planner at your local council can discuss with you how these developments are addressed in your local government area.

Currently, there is no official body collecting statistics on granny flat approvals and construction, but Smith is confident that recent policy changes will translate to big business in the future, and both he and Young say that enquiries are increasing. And not just from Grannies.