What does it cost to build a granny flat?

13 September 2019

If you’re looking to house a loved one, accommodate guests or even generate some extra money, a granny flat can be one option to consider. We look at how much it is likely to cost and outline some key issues to consider.

Are you thinking about adding a granny flat to your home? While in some cases a granny flat can be a suitable option for an elderly parent – hence the name – there are lots of other potential uses for them too. Maybe your kids are all grown up but not quite ready to move out yet or are staying at home to save for a home deposit. Or perhaps you have regular guests and would like to create more space to make them – and you – more comfortable when they come to stay. 

You may just want a home office away from the main house that can easily be turned into accommodation if needed. Or you might even be thinking of adding a granny flat to rent out and earn yourself some extra income. Whatever the reason may be, a granny flat could be a solution for a range of circumstances, but what’s involved in actually adding one to your property?

Source: Artazum (Shutterstock)

What is a granny flat?

A granny flat is a small, self-contained dwelling with a separate entrance on the same block as a main house in a residential zone. How they are set up can vary, but typically a granny flat will feature a kitchen, bathroom, living space and a bedroom (or bedrooms). 

Some people opt for a basic studio flat which has a larger living area that has room for a bed rather than including a separate bedroom. The granny flat can be attached to the house, semi-attached or detached. There are different rules for granny flats in each Australian state and territory and guidelines also vary between local councils, so it’s important to do your research before you proceed.

How can I find out if I can put a granny flat on my property? 

You should contact your local council which should be able to outline the rules for granny flats in your area and help you determine whether or not you can build a granny flat on your property. Considerations may include the size of your block, how far it must be from the boundary and the existing house, and the dimensions of the granny flat. Most states and territory specify a maximum size for a granny flat. In NSW, for example, as a general guide the site must be at least 450 square metres in area, have a 12 metre wide frontage and the granny flat can be no bigger than 60 square metres. 

Do I need council approval to build a granny flat?

It typically depends on the rules in your area. In many cases you will need to apply for approval but in some areas you may not need council approval as long as you meet certain criteria. For example, if your property is in the Brisbane City Council area and you’re building a granny flat for a member of your family you may not need need to apply for council approval if your land is larger than 450 square metres and the granny flat is no bigger than 80 square metres. 

Either way, it could be a good idea to get in touch with your local council to find out what permits and approvals may be necessary.

Renovating home granny flat
Source: Jo Ann Snover (Shutterstock)

How much does it cost to build a granny flat?

Granny flats can cost anywhere from around $70,000 to $200,000, according to estimates from a variety of builders and providers we looked at. The exact cost is likely to depend on the size of the structure, the materials used and the quality of the land. As an example, in 2015 quantity surveyor BMT Tax Depreciation said its data suggested that on average a granny flat would cost $121,000 to construct. 

The cost will also vary depending on whether you opt for a kit or ‘flat pack’ granny flat, or get one custom built. 

According to hipages for a kit granny flat including a slab, plumbing and electricity you might expect to pay $81,000 for a 38m2 granny flat, $95,000 for a 50m2 one and $120,000 for a 71m2 granny flat. The website recommends you compare quotes carefully and understand the inclusions as they may vary between kit builders. 

You may also be able to pay extra to upgrade certain features. For example, if you don’t like the standard cladding, many kit home suppliers can provide other types of cladding, such as fibre cement sheeting, painted timber weatherboard cladding or brick veneer for an additional cost. Make sure you find out what the charges would be for any upgrades you like. The hipages website also suggests finding out if there are any extra fees for plumbing connections beyond a certain distance from the main house.

One way you may be able to reduce the costs is to not include a kitchen. This could be an option if the granny flat is being used for a family member that can use the kitchen in the main house.

Keep in mind the quality and gradient of the land will also be a factor. If you are building a granny flat on a sloping block for example it will likely cost you more than if you had a flat area. 

Whether you engage a local builder for your renovation or a company that specialises in granny flats for your new build, think about getting at least three quotes and make sure you are comparing them based on all the same inclusions so you are getting a true picture of the final cost. That way you can help avoid any nasty surprises.

How can I finance granny flat construction?

It’s wise to consider how you might finance the work before you start.  

 Options could include:

What is the best design for a granny flat?

There are a number of factors to consider when planning the design for the granny flat including orientation, natural light, ventilation, insulation and privacy. A lot will come down to personal taste and it will also depend on what you will be using it for. If your granny flat is for your elderly parents, for example, having it all on one level with no stairs might be a priority. Or if your property is on a slope, you might consider a split-level design. 

If you’re hoping to rent out your granny flat to earn some extra income, orientating it away from the main house and creating a separate street entrance to maximise privacy could help attract tenants.

Is a granny flat a good investment?

The answer to this will depend on a number of different factors including where your property is, how you plan to use the granny flat and how much it will cost.

If you are hoping that a granny flat will add value to your property it’s a good idea to do some research. Have a chat with a few local real estate agents to get their opinion about whether it is a good option and if so, you could ask them for an estimate of how much value it is likely to add. In some cases the cost of building a granny flat will be more than the value it adds to your property, but you may still want to go ahead if it suits your circumstances. There is also a risk that a granny flat may make it harder to sell your property when the time comes as not everyone will want a home with a granny flat. 

Can I rent out my granny flat?

You may be hoping to earn some extra money by renting out your granny flat, but be sure to check the rules in your state as in some locations it may be illegal or you may be only allowed to rent it out to a family member. As a general guide you should be able to rent out a granny flat in NSW, Western Australia, ACT, Tasmania and the Northern Territory but in Victoria, Queensland and South Australia it may be illegal or restrictions may apply. However, consider checking with your local council for specific rules that might apply to you. 

There can also be tax implications involved in renting out a granny flat. It could be a good idea to seek professional advice.

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Main image Source: Enrika Samulionyte (Shutterstock)

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