Granny flats, also called studios, secondary dwellings or self-contained apartments, have quickly become one of the most sought-after features for family homes in Sydney and Australia in general.
Essentially, a granny flat is a second home on the same property as your main house, with its own entrance, bathroom, kitchen, bedroom(s), and even a laundry. You can hire the best granny flat builders in Sydney to erect this structure either as an attachment to or completely separate from the main house on the same piece of land.
But just like with any big project, building a granny flat comes with its challenges. If you rush into it without thinking through the details, things might not go as smoothly as you expect.
In this guide, we’ll break down everything you need to know about granny flats, from their size and structure to getting approvals and even the taxes involved.
Pros and Cons of a Granny Flat
Just like every other type of accommodation, granny flats have their ups and downs.
Pros
- Extra Income: If you decide to rent out your granny flat, it can bring in some extra cash. This could help with your mortgage or increase your savings.
- More Space: A granny flat can give you that breathing room without the hassle of moving houses.
- Helping Out Family: If you’ve got elderly parents or family members with disabilities, you can keep them close enough while giving them their own space.
- Boosting Your Property Value: A granny flat can actually add value to your property. It is an upgrade to your home that will pay off in the end, whether or not you plan to eventually sell off the property.
Cons
- Expenses: Building a granny flat will take a considerable chunk of your net worth. Even after the building has been erected, you’ll probably be paying higher utility bills such as water, electricity, and the like.
- Council Approval & Planning You can’t just build a granny flat wherever you want. There are rules and regulations to follow. Things like the size, placement, and how it’s going to be used are all things you need to check with your local council.
- Privacy: Having someone living in your backyard can affect your privacy a bit.
- Potential for Disagreements: Living close to others, especially family or tenants, can sometimes lead to tension.
Requirements for Granny Flats
First things first, it’s important to know that you can’t just build a granny flat anywhere, even if your neighbour has one.
Each area, or council, in New South Wales, has its own set of rules and requirements regarding granny flats for what you can and can’t do. These rules cover things like how big the block of land needs to be, the size of the granny flat itself, and how far the granny flat needs to be from things like fences, trees, and your main house.
For starters, in Sydney, you need to have an existing house on the property. Granny flats are considered ancillary dwellings, which just means they’re secondary to the main house.
You can’t build a granny flat on an empty block of land; the house needs to come first. If you have a duplex (a house with two separate living areas), you can actually add a granny flat now, as the rules have been updated to allow that, as long as there’s enough space left on your property.
If you’re planning to rent out your granny flat, just like any rental property, you’ll have to follow certain rules. There are tenancy laws that apply, and they lay out your rights as a landlord and the responsibilities you have to your tenants.
Average Prices for Granny Flats
The average cost of building a granny flat in Sydney in 2024 depends on a lot of factors, but with a starting point of $80,000 and reaching up to $200,000 or more. The actual range really depends on the kind of granny flat extension you want to build. For instance:
- Basic Granny Flat (30-40 m²): This will set you back around $80,000 to $120,000. If you’re going for something small, with fewer features, this is the range you’ll likely fall into.
- Mid-Range Granny Flat (40-60 m²): If you want something a little bigger or more customised, expect to pay between $120,000 and $150,000.
- High-End Granny Flat (60-80 m²): For a larger, more luxurious granny flat, you could be looking at prices from $150,000 to $200,000 and beyond. But of course, these types of flats would have premium materials, top-tier finishes, and more space.
Approval Process for Granny Flats
In New South Wales, there are two main ways to get approval for your granny flat. The first is through a Development Application (DA) process with your local council, and the second is through a private certifier using a Complying Development Certificate (CDC).
The CDC process is generally faster because it skips some of the more detailed steps in the DA process, but either way, you’ll need to get approval before you start building.
Once your granny flat is built and you’ve finished the necessary steps, you’ll need to get an occupation certificate, which proves that the granny flat is safe to live in.
After that, you’ll still need to get a final occupation certificate for your entire property, including the main house and granny flat, within five years.
Key Considerations Before Building a Granny Flat
Here are the key considerations you need to take into account before you begin your granny flat project:
Available Space
The maximum size for a granny flat home extension in Sydney depends on the council, but it typically ranges from 60m² to 90m². So, if you’re thinking about building a small house in your backyard, that’s your general size range.
And don’t forget, there are also size rules for the land itself. The lot needs to be big enough to support both the main house and the granny flat.
Alternatively, if you’re constrained for space, you might want to consider renovating your single-storey into a duplex.
You’ll also need to consider the setback requirements, which refer to how far your granny flat needs to be from your property boundaries. The setback rules will vary depending on things like the height of the house and granny flat as well as the layout of the property. So, if you’re planning a two-story granny flat, the CDC rules might be different than if it’s just a single level.
Parking
When you’re building a granny flat, you probably don’t want to end up in a situation where no one has anywhere to park. Sydney’s local council rules often have strict requirements about parking when you build a granny flat.
For example, you may be required to have a dedicated parking space for the granny flat, especially if you plan to rent it out. Also, if your granny flat is on a shared property, there needs to be enough room for both the main house and the granny flat to park without blocking each other.
Your granny flat builder could help you add a separate parking area or even make sure that both spaces are wide enough for people to park without having to shuffle around or make multiple attempts to park.
Landscaping
The layout and landscaping of the available space will decide the structure of your custom granny flat in Sydney or any other additions you should make.
If you want to create a little privacy for the granny flat, you might want to add things like fences, garden hedges, or privacy screens. If the main house and the granny flat are close together, a good fence or screen can help make the space feel more independent.
Also, consider how you’ll manage your outdoor space. If your granny flat tenants or family want to spend time outside, think about creating a small patio or seating area.
What Taxes Apply?
If you’re building a granny flat for family members, especially older relatives or those with a disability, here’s some good news: there’s a chance you could be exempt from paying capital gains tax (CGT).
This exemption started on July 1, 2021, and it applies to formal granny flat arrangements where the accommodation is for elderly family members or those in need of disability care.
However, you should know that this exemption does not apply to you if you are building a granny flat for commercial rental.
If you plan on renting out your granny flat, you’ll need to pay tax on the rental income, just like any other rental property. How much tax you pay depends on your income tax bracket, how much you earn from the rent, and any tax deductions you’re eligible for.
To qualify for this CGT exemption, you need to have a formal, written agreement for the granny flat. In the past, people avoided formalising these arrangements to sidestep CGT, but that meant there was no legal protection for the person living there.
Let Brickwood Homes Give You a Granny Flat You’ll Be Proud Of!
If you’re ready to turn that extra backyard space into something truly special, then let Brickwood Homes help you bring your granny flat dreams to life.
Our team focuses on the details, like making sure your granny flat has great flow, is easy to live in, and is built to last. We know how important it is to feel comfortable in the space, so we’ll make sure every part of it is well thought out, from the layout to the finishes.
Get in touch with us today, and let’s start planning your perfect granny flat as soon as possible.
