The Evolution of the Granny Flat and How You Can Capitalise on Your Existing Property


The housing affordability crisis rolls on all around the country. As a result, renters and homeowners alike are looking for savvy solutions for affordable housing and to enter the investment property market.


Enter – the granny flat. Once considered to be as tricky to complete as a full-blown reno, building your own granny flat is now more accessible than ever.


In 2009, the NSW government overhauled granny flat laws. The policy changes meant homeowners could gain approvals to begin building granny flats in as little as just 10 days, resulting in a boom of secondary dwellings. Thanks to the 2009 revisions, the only tough restrictions now relate to block size – granny flats may only be built on blocks larger than 450 square metres – and the size of the development – 60 square metres maximum.


Similarly, WA, NT, ACT and TAS also have quite relaxed policies on granny flat construction, supporting homeowners to reach the next step in growing their property’s capital.


In addition to the fairly simple proposal process, these three states and two territories allow homeowners to rent out their granny flats as separate properties for rental income, as long as they are approved for use as a residence.


If you’re living outside of these regions, see how your state compares below:

  • In Queensland, laws are slightly stricter and only a handful of local councils in the state allow homeowners to rent out granny flats under certain stipulations, and providing homeowners are granted council approval for their granny flats.

  • Victoria is currently reviewing legislations around granny flats – known in the state as Dependent Person’s Units (DPU) – to simplify the proposal process and support homeowners. However current legislation in most local councils across the state restricts granny flats from being occupied by non-relatives of the primary home-owners.

  • South Australia remains the most stringent in its regulatory framework around granny flats. The state still does not allow granny flats to be rented out by homeowners as a separate property to occupants who are unrelated to them.


Legislation continues to vary state by state, and by local councils, but the potential return from a low entry point investment property such as a granny flat is becoming an increasingly attractive option to existing homeowners and renovators.


Keen to get on the granny flat bandwagon? Begin by getting more information from your local council to ensure you’re aware of the regulations that will apply to you. Once you have your development approvals in order, get in touch with us to find out how we can help with finance on your investment property dreams.


Our Granny Flat Loan offers competitive variable rates, when compared to our standard variable rate home loans. Speak to one of our Lending Consultants on 1300 302 474, 8am – 6pm AEDT, Monday – Friday.