What is a dual key apartment?
A dual key apartment is a single dwelling divided into two separate, self-contained ones. Each one will typically include the expected amenities for a home, such as a bedroom, bathroom, kitchen, and living space, but this will depend on the property and layout. Dual key apartments often have a shared foyer that provides access to two lockable doors.
Dual key houses also exist, and these work on the same principle as apartments, but may be laid out as one larger main dwelling alongside a separate smaller one.
You might also come across so-called ‘dual living’ properties, which may have options for multiple ‘self-contained’ living spaces (meaning, multiple kitchens and bathrooms). This may be the case if a property has a granny flat or guest suite with its own bedroom, kitchenette, and bathroom.
What are the potential advantages of dual key properties?
1. Potential to receive two incomes
For investors, the main appeal of dual key properties is that a single investment can produce a dual income. In this respect, they are similar to duplexes and houses with granny flats.
Steve Stemp, a mortgage broker at dual key and duplex housing company Dual Key Homes, said the company’s largest market is investors looking to maximise the income from their property.
“These investors are looking for a cash flow position where the property maintains itself through its rental income,” he noted. “In other words, it meets the interest payment and costs associated with that property.”
Of course, this expectation of cash flow assumes there’s tenant demand for the property. As property investment adviser Michael Yardney notes, this may be limited. “Not everyone wants to share the front door or a yard or other things with somebody else,” Mr Yardney said.
2. Ability to combine a home and an income stream
Another potential benefit of dual key dwellings is that owners can live in one half of the property and rent out the other. This can help subsidise mortgage repayments if the property was purchased with a home loan.
3. One set of fees
Because dual key properties have only one property title, owners only need to pay one set of council rates and, for dual key apartments, one set of body corporate fees. Duplexes however, incur two sets of council rates because they have two titles, being two individual properties.
4. Separate living spaces for family
For some, the appeal of a dual key property may not lie in the added cash flow of a rental income, but in convenience. The second dwelling could create more privacy within a family, allowing it to be occupied by other family members or a carer.
5. Less risk of a property being unintentionally empty
One of the main risks for property investors is a period of vacancy, whether caused by lease transitions, repairs, or unexpected tenant departures.
Dual-key properties can reduce this risk, as it’s typically less likely that both portions of the property will be unoccupied at any given time.
What are the potential disadvantages of dual key properties?
1. Less resale demand
One key risk of dual key properties is that many are designed in such a way that they largely only appeal to investors, not owner-occupiers. This may exclude a large portion of the potential market if you ever need to sell.
2. Stricter lending requirements
Lenders can be stricter when it comes to approving home loans for investment properties versus owner occupied ones, due to higher perceived risk. This can mean an investor must put down a larger deposit and meet stricter serviceability requirements, especially when buying a dual key property.
“Some banks and lenders have reservations on these,” Mr Yardney said. “They’re not as keen to lend because they know that if ever things go wrong and they have to sell, they can get stuck because there’s not as big a demand for it.”
3. Must be sold as one property
Since dual key apartments share one title, they must be sold as a single property and typically can’t be split. While some dual key properties could potentially be converted into one large home or apartment later, this can be costly and logistically-challenging, depending on the property's design.
If you’re considering investing in a dual key apartment, it’s important to do your own research about the market and the potential benefits and risks involved. It’s also a good idea to compare home loans to get the best deal for your individual circumstance. If necessary, you might want to seek financial advice tailored to your specific circumstances and needs.
