7 things to know when building a granny flat

01. Space

One of the first questions Backyard Grannys is asked when fielding new enquiries is will a designer granny flat fit in my yard? First, your property must be zoned residential and be a minimum of 450m² in total area. Additionally, there are a few other areas you need to consider, you can find out how to build your granny flat with no council approval here. The granny flat itself can be a maximum of 60m² to be considered a complying development.

02. Site requirements

Your property must have a 12m width at the building line of the existing dwelling. A setback of a minimum 3m must be maintained from the rear of the property and 0.9m from the side boundaries. Your granny flat is required to maintain a distance of 3m from any existing trees that are over 6m in height. Site access is also a consideration. Ideally, 1.2m to 1.5m clear access will keep costs down and while it’s not impossible to work with smaller spaces it will add to the costs due to the manual labour required.

03. Your Budget

Obviously budgeting and finance are a big consideration when building a granny flat and we highly recommend speaking with your bank or financial adviser ahead of committing to a build. At an average cost of between $120,000 and $130,000, making granny flats much more affordable than a large-scale home.

04. Approvals

A key question is what approvals are required and from whom? A few years ago, the NSW Government released what’s called the Affordable Housing State Environment Planning Policy (SEPP) which regulates the construction of secondary dwellings. The term ‘complying development’ was mentioned earlier and that simply refers to all the minimum requirements outlined above. In addition, a CDC for a granny flat must be:

• Established in conjunction with another dwelling (the principal dwelling),
• On the same lot of land as the principal dwelling (and not an individual lot in a strata plan or community title scheme), and
• May be within, attached to, or separate from the principal dwelling.

You will need to apply for a Complying Development Certificate (CDC) through your council or an accredited certifier. For full details visit our website for an easy-to-understand section all about granny flats.

05. Time

Construction time for your new granny flat is generally between 12 and 14 weeks. It may seem like only a few months, but you really need to think about the implications the build might have. If you’re building in your own backyard, will your day-to-day activities be affected?

06. Depreciation

As a secondary dwelling, a granny flat must produce an income before you can claim depreciation. Assuming that’s the case, you can claim depreciation for capital works. These includes the wear and tear the structure undergoes during its lifetime. Speak to your accountant or a taxation expert about the potential for depreciation because owning a granny flat can add to your depreciation schedule even if the main dwelling is owner/occupied.

07. Tax implications

If you are building the granny flat to provide a rented space to a relative such as your parents or children, you will not be eligible for any tax deductions. However, income received from renting the dwelling to a third party is taxable and deductions are available for the costs of financing the build, maintenance and ongoing running costs.