9 May 2022

A Guide to building a granny flat

Emma McLaren
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Granny flats are small apartments attached to or in the same compound with the main living structure on a compound. These buildings can be used for various things; ageing parents or grown-up children can be allowed to live in them to ensure proximity while giving privacy. Granny flats can also boost the value of a home's rake in net income for the homeowners.

While the benefits are there, getting one is not very straightforward. You have to make sure that you make consultations and do your research to see if you and your home are eligible for the process. We will be going through a few frequently asked questions to give you an idea of what building one entails.

Can I build a granny flat on my own accord?

You can't just decide to get up and build a granny flat. Some certain rules and regulations are attendant to various construction processes and might come up in any building scenario. It is even possible that your neighbour is allowed to build one while you are not. The important thing to note is that different states have their own legislation regarding building other structures within compounds.

Allan Stroud, the founder of Lifestyle Granny Flats, confirms this, asserting that in Queensland, the legislature is evenly varied from shire to shire. He talks about how this legislation sets down standards and limits (on how big a person can build), which must be adhered to. These laws are also altered from time to time. He gives the instance of the Moreton Shire, where the size limit was recently changed from 70 sqm to 50 sqm due to various issues with parking and infrastructure.

He adds that in Logan, deterrence was imposed in excessive charges due to the increased difficulty in providing access to dual occupancy units. On the other hand, Brisbane allows for structures up to 70 sqm, but they are not allowed to be more than a double bedroom. Other territories also have their own laws concerning construction. To know the specific rules of your territory, the best thing to do is to make enquiries. Avoid hearsay by making these enquiries directly from your local council.

Who are the people allowed to live in granny flats?

This again depends on the state you are living in. It is an exercise in delusion to think you would be able to generate income through the rent in places like Brisbane and Adelaide. Legislation in these cities stipulates that they cannot be used to accommodate people you do not know. In essence, you are only allowed to accommodate an immediate family or what the law describes as a ""dependent person."" These laws are stringent in these places, even demanding that you are mandated to immediately dislocate the granny flat once such a person moves out.

However, in other places, you are allowed to rent out your granny flats. This is permitted in areas like New South Wales, Tasmania, the ACT, etc. In a study carried out by Gateway, it was observed that over 20% of the granny flats in Australia were being used as a means of income.

Who exactly can claim ownership of the granny flat?

Allan Stroud advises that in the process of building a granny house, there should be no confusion as to who is intended to live there. This is as important as the building process itself for various reasons that might arise in the future. He talks about how the issue of ownership is essential and how families could be on good terms in the present but may have issues along the line. Therefore, it is advisable to seek legal consultation when building a granny flat.

He mentions how his company organises forums to educate the public on these issues and how they help retired folk maintain their accommodation in the eventuality of a fight.

How much are granny flats?

Paul Thomas, the Chief executive at Gateway bank, talks about the cost of a granny flat. He estimates the price for one at between $20,000 to $200,000. These figures largely depend on the type of granny house being built, its purpose, and the condition and style in conjunction with the main home.

He claims that for just above $20,000, one can get a flat-styled DIY accommodation, while for $70,000, you can get a prefab one-bedroom accommodation. Custom dwellings have starting prices of about $120,000.

Another expert, the Managing Director of Backyard Grannys, Alex Mitchell, who works in Newcastle, puts the price for a one-bedroom granny flat at $90,000 and a two-bedroom flat at $105,000. He says that the average cost people typically spend on a granny flat lies around the $130,000 mark.

How do I pay for my granny's flat?

Thomas advises that homeowners should apply for loans if they are still clearing their mortgages. He breaks it down further; it makes sense to use your main home's equity to help with the financing. However, there would still need proof that it is entirely practical for you to pay back the new loan you are taking out.

He also points out that the revaluation of your original home would come in handy in this process. Projections should also be made on the added value of the granny flat to the house.

Like some other financial organisations, Gateway Bank has developed offers and deals that cater to the granny flat niche. In taking them up on these offers, you would be required to repay your existing mortgage with the present creditor you are patronising to enable you to get a ticket to a new granny flat loan.

Does it take long to get the granny flat approved and built?

As mentioned before, you need to be given a license and approved to build a granny flat. Alex Mitchell estimates the blueprinting/approval process to take around 8-10 weeks. Many things would be done in these weeks, including the planning, engineering, contract drawing, signing, getting the official approval from the CDC, etc.

Thomas warns that there are exceptions. The process can take as long as a year in places with stringent stipulations.

On the other hand, the building process can take as little as six weeks, depending on the type of granny flat you are building. At Backyard Grannys, Mitchell says that 12-15 weeks are to be expected depending on the complexity of the granny being constructed.

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