Greetings from your one-stop granny flat resource, Pillar Build Granny Flats! Traditional real estate frequently appears unaffordable for many Australians looking to establish or grow their property portfolios due to the continuous rise in home costs. Presenting the guide to granny flats Australia: an affordable, cosy fix.
If you’re excited to begin your own Australian granny flat journey and need assistance throughout the entire process, contact our team of professionals. We will provide everything you require to develop your granny flat successfully.
All About Granny Flats Australia
A granny flat is an additional dwelling on the same property, regardless of whether it is attached to or distinct from a primary residence. It’s a fully self-contained unit with its entrance, bedroom(s), kitchen, laundry, and toilet amenities. It maximises or monetises your spare garden space while using it well.
Granny flats offer many benefits, such as affordable renting options and applicable living arrangements for family members. However, like any other construction job, it is essential to manage the project with caution to reduce risks.
We’ve already laid the foundation for you, which is terrific news! With the support of this thorough guide, you can successfully begin your granny flat project.
We’ll review every aspect of granny flats, including their rising demand, expenses, potential layouts, and approval procedure.
Now, let’s get started!
Why Build a Granny Flat in Australia?
Granny flats provide a range of advantages for different types of property owners, from high rental yields to the ability to accommodate family members in privacy. Consider developing one for the following primary reasons:
Granny Flats: A Scalable Investment
Granny flat income might reach $14,000 year!
In Australia’s cities, housing costs are still rising, making it difficult to find reasonably priced rental houses in desirable neighbourhoods. Granny flats are a clever option since they give renters a reasonably priced rental area and allow homeowners with excess rear space to make extra money. They are, therefore, a win-win solution.
A cheap way to begin your property investing adventure is by installing a granny flat behind your primary residence instead of buying a brand-new property altogether. This tactic will launch your side business without requiring a large debt. Depending on size, features, and location, a granny flat can bring in hundreds of dollars weekly.
If you find the annual returns enjoyable (usually between 10 and 20 percent), you could become one of the many prosperous granny flat owners who have turned their side gig into their primary source of income. Smart investors scale up by purchasing more properties and building additional flats, reaping the benefits of positively geared investments.
Pros:
Cost-Effective Investment: You don’t need a sizable loan to begin building or purchasing a granny flat because it usually costs less than
purchasing a stand-alone investment property.
Extra Income: Depending on its amenities and location, a granny flat might bring in hundreds of dollars in rent each week.
Convenient Accommodation: A granny flat offers the flexibility you or your loved ones require while looking for a private place to stay.
Increase in Property Value: A granny flat can raise the value of your home by as much as 30% if it complies with regulations.
Cons:
Shared Space: You might have to share your backyard with tenants, which could result in uncomfortable situations.
Building Costs: Before beginning, work with a reputable contractor that offers a precise, all-inclusive quote, as construction costs often
surpass first projections.
If you take these things into account and choose to move on, purchasing a granny flat can turn out to be one of your best decisions ever.
Higher Worth of the Property
A well-planned and legally compliant granny flat can raise your property’s value by as much as 30%, particularly if it fits perfectly with the current architecture. You can add much value to your property by using high-quality materials and strategically placing the block.
More Family Space
A granny flat is an affordable option for young adults struggling to purchase their first home. While living alone, people can continue contributing to the investment until they have enough money to move out. You get back your space and give them a safe place to live. After your child moves out, you can use the granny flat as a vacation house, a rental, or a place for older relatives to stay.
Inexpensive Care
Family Members Affected by Disability
A granny flat offers your in-laws with disabilities a quiet, respectable place to live while also providing you with peace of mind due to its close vicinity. The National Disability Insurance Scheme (NDIS) may fund at-home assistance and accessibility adaptations.
Ageing Family Members
Granny apartments allow you to protect Gran and Grandad’s privacy while keeping care expenditures within the family. If evaluated by an Aged Care Assessment Team, they can still be eligible for government-subsidised care and obtain the appropriate degree of family assistance.
Granny Flats Cost: A Brief Guide
What is the price of a granny flat?
Granny flat costs range widely, from $20,000 to $290,000. The price is affected by several factors, including:
Site Reports and Consultations: Planning, surveying, and preliminary evaluations.
Design and Approvals: Paying for architectural design services and securing required licences.
Materials and Construction: The labour and building supplies price.
Finishes and Features: Extra facilities, unique fittings, and finishes.
Size: The total square footage and number of bedrooms.
Knowing the entire cost before you begin your job is essential. Be sure to consider a turnkey price that covers everything, including plumbing, permits, site surveys, and utility connections. Many companies that sell kit homes offer starting pricing that might not be accurate.
Our investigation of more than nine businesses, spanning from Sydney to Newcastle, yields a helpful pricing breakdown:
One-Bedroom Granny Flat: A fully turnkey 1-bedroom granny flat project will likely cost between $120,000 and $140,000.
Two-Bedroom Granny Flat: A two-bedroom layout costs from $145,000 to $155,000.
Three-Bedroom Granny Flat: A fully turnkey home costs between $145,000 and $160,000.
Complete costs, however, often fall between $220,000 and $250,000.
Don’t make the mistake of selecting any contractor for your granny flat renovation. Pillar Build Granny Flats, a builder with experience in granny flats and familiarity with the particular rules and specifications, is what you need. A qualified, experienced granny flat builder will assist you in controlling expenses and guarantee the successful completion of your project.
See our Ultimate Guide to Granny Flat Prices for a more thorough examination of the factors influencing granny flat costs.
Take Advantage of CGT Exemptions on Family Granny Flat Bookings
Good news for individuals developing granny flats for family members: official arrangements for elderly or disabled relatives will be excluded from capital gains tax (CGT) as of July 1, 2021. The current regulation states that CGT will not apply when creating, modifying, or terminating a formal, written granny flat arrangement if it is meant for an elderly relative or a person needing disability care.
Since supporting underprivileged family members is the main goal of this exemption, it does not apply to commercial rentals. It encourages families to formalise their agreements by removing a significant barrier to them, offering legal protection against financial abuse or exploitation if relationships change. Due to CGT worries, homeowners used to frequently eschew these formalities, leaving agreements unofficial and without legal protections.
Four million disabled persons and 3.9 million pensioners are predicted to gain from this exemption. The measurement is in line with:
The National Plan to Address Elder Abuse in Australia;
2017 Report of the Australian Law Reform Commission: Elder Abuse – A National Legal Reaction; and
Review of Granny Flat Arrangements by the Board of Taxation.
See the official government press release for further information.
One Last Tax Remark
Like any other rental property, you must pay taxes on the income if you intend to rent out your granny flat. Your income tax bracket, marginal tax rate, and allowable deductions will determine how much tax you owe.
Whether your granny flat investment is negatively geared will determine whether you qualify for tax benefits. Rental revenue is deemed negatively geared if it exceeds loan interest and maintenance charges, which enables you to deduct these costs. You can only deduct maintenance costs if rental income exceeds loan interest payments.
It does not matter whether your granny flat is negatively geared; you can still deduct depreciation, which in New South Wales can be up to $5,700.
Approvals for Granny Flats
If you’re building a granny flat, we have good news! Although approvals can seem like the most laborious component of a construction project, they aren’t always. Before 2009, obtaining permission to build another dwelling required a protracted wait. The Cheap Rental Housing State Environmental Planning Policy, which aims to offer cheap housing in New South Wales, changed this regard. Rather than submitting a laborious Development Application, builders can now submit a Complying Development Certificate.
However, not every granny flat is eligible for this expedited approval. The structure must fulfil certain requirements. See the Ultimate Guide to Granny Flat Approvals to determine if your project qualifies.
Make Sure to Play by the Rules
Make sure your granny flat conforms to local standards before construction starts. Here are a few fundamental rules to follow:
1. Minimum Size & Residential Zone:
The granny flat must be constructed on a minimum 450 m² residentially zoned lot. Learn more about the granny flat size guide.
2. Single Granny Flat Per Property:
Each property may only have one granny flat.
3. Acquisition:
The owner of the primary residence and the granny flat must be the same person.
4. Largest Living Area:
The granny flat’s interior living area shouldn’t exceed 60 m².
5. Unobstructed Pedestrian Access:
There must be unhindered pedestrian access to the granny flat.
To find out which particular laws and ordinances are applicable in your area, get in touch with the local council.
