Granny flats generate income for relatively little outlay.
There is a boom in granny flat construction. Property owners are taking advantage of simplified approvals to secure the income and flexibility that a small, second dwelling can deliver.
The NSW Department of Planning and Environment data shows that 4,818 new granny flats were built in 2014, compared with 2,867 the previous year, and three times more than the 1,500 built in 2010.
With housing affordability a key issue, state governments have made approvals for the construction of granny flats quicker and easier.
In NSW, the minimum land size required to build a granny flat has been lowered to 450sqm. The maximum size allowed for the flat is 60sqm. The land can’t be subdivided, and must remain as one principal dwelling and one secondary. Approvals can be granted in as little as 10 days.
Jay Wright, founder of grannyflatfinder.com.au, says since the site started in 2012, “We've really seen a massive increase in volumes of traffic and enquiries, and also interest from builders servicing this particular niche."
Jay said that most of their customers are investors seeking a second income from their investment properties. For an outlay of around $100,000, granny flats are a relatively inexpensive way to generate an income.
Jay said, "I don’t think we’re at saturation point with everyone knowing about granny flats as an investment strategy, but for those who do, it’s a really valid investment proposal where you have a dual-occupancy property, and the cost to develop that second income is relatively small compared to the yield."
"There are a lot of savvy investors out there who a grabbing up big blocks and adding a granny flat, which makes sense when you look at the numbers."
Granny flats can also be a flexible way of accommodating family - residents need not be grannies. A granny flat can accommodate extended family, teenagers, or elderly parents as an alternative to assisted-living homes.
Grannyflatfinder.com.au’s most popular style is a traditional 60sqm, brick veneer, two bedroom flat – reflecting the investor profile. But Jay said, “There are also some pretty cool modern designs that get a lot of attention on social media.”
Grannyflatfinder.com.au is riding the wave of interest in granny flats. The web site provides information about design, costs, and builders. "There are a lot of fly-by-night building companies out there, and there are a lot of really reputable companies that don't get the recognition they deserve,” said Jay.