Relaxed planning rules makes it easier to profit from granny flats
If affordability is an issue preventing you from investing in property, you'll be happy to know that planning laws have relaxed to give investors new opportunities to profit from an extra dwelling or subdivision.
Originally the purpose of a granny flat was to help families with affordable accommodation and only "blood relatives" could occupy it. Now granny flats can be treated as investments.
Brisbane is a good example. Its council has introduced a series of neighbourhood plans under the Brisbane City Plan 2014. Rezoning older low-density residential suburbs to higher density is a key element, including increased building heights in some areas and allowing granny flats and "splitter" blocks (where a house block can be subdivided).
Brisbane expert Matthew Wall, director of PPI Advice, says the changes have created opportunities for infill development by allowing higher-density living.
"Splitter blocks and LMR [low to medium density residential] zoned properties are providing opportunities for owners and investors," says Wall.
"A property that is 800 square metres can be split into two titles if you make sure you have even street frontage of a minimum of 10 metres. A property of 600sqm can be split into two with even street frontage (minimum 7.5m each) provided they are within 200m walking distance of a commercial precinct."
Granny flats: the basics
The criteria to define a granny flat (also known as a secondary dwelling, auxiliary unit or dual occupancy) can vary from one council to another but general guidelines are:
- Granny flats can be built only on residential-zoned property.
- The granny flat owner must be the owner of the primary dwelling.
- Each property is limited to one granny flat.
- Granny flats cannot exist on strata title, subdivided or community title property.
- Granny flats can either be attached to the primary dwelling or be freestanding.
- Granny flats must have clear, separate and unobstructed pedestrian access.
Granny flats can be rented to people outside the family as an investment property in NSW, Western Australia, the Northern Territory, Tasmania and the ACT. Some local councils in Queensland, including Brisbane City, Ipswich City and Logan City, have specific guidelines.
Requirements for planning permits and approvals vary between states, so investors need to check the guidelines with their local council before going ahead.
Current granny flat rules
| NSW | A block must be at least 450 square metres and the granny flat cannot take up more than 60% of the property. Granny flats are typically 60sqm , but patios, verandahs or carports can be added. |
| WA | Ancillary dwellings can be used for private tenants, carers or unrelated seniors and students. The maximum floor area is 70sqm, although this may differ across council areas. |
| NT | The floor area cannot exceed 50sqm (urban) or 80sqm (rural). |
| ACT | Granny flats can now be up to 90sqm (an increase from 75sqm) and the residents do not have to be related to occupants of the main house. |
| Brisbane City | Council approval is needed for a granny flat if it's bigger than 80sqm or rented to someone unrelated to your household. If it's for a household member, you don't need approval provided it's smaller than 80sqm and within 20m of the main house. |
| Ipswich City | It has a similar scheme known as "dual occupancy - auxiliary unit" and makes no stipulation that the auxiliary unit must be occupied by a family member. |
| Logan City | Logan differentiates between a "secondary dwelling" (must be occupied by a household member) and an "auxiliary dwelling" (can be rented out). The maximum size is 70sqm. |
| VIC | At present granny flats can be occupied only by a family member and if the occupant dies or moves out, the granny flat has to be removed. However, the state government announced in January that it would review planning obstacles for smaller-scale infill projects, which include granny flats. Recent reports indicate Victoria will review its laws on granny flats during 2016. |
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