Are you considering investing in a granny flat in your backyard for rental purposes, family use or for elderly parents? If your answer is YES, we’re pretty sure you are pondering on the advantages and disadvantages of building one before making the final decision.
Granny flats are a small unit or apartment separate from your main house or secondary home in your backyard. A brief history of the granny flat is that they became popular with aging parents in mind. The purpose of the granny flat, in the early years, was to keep families together. Parents or in-laws who prefer to stay close to their loved ones are enjoying the benefits of the granny flat. The need to stay in-home care has now become a major priority for having a secondary residence. The concept of the granny flat has evolved and has now become known to be a great source of income and a necessity for families.
Modern designs for granny flats are also now in the marketplace, an example can be found on The Pod Canberra website.
Like all things, there are Pros and Cons for having a Granny Flat. Here are just a few of them.
|A cheaper and more cost-efficient alternative for tenants and live-in owners||Once you build a granny flat on your block you can no longer subdivide|
|Rental income in your backyard. Your Pod will be positively geared as soon as you rent it.||There could potentially be “ unforeseen” additional costs e.g. tie ins and upgrading of electricity/gas|
|A great way to keep you and your family closer as they become teenagers or the elderly.||Tenants may not come to terms with the homeowners being close|
|Promotes independence and privacy with keeping secure and safe||Potentially longer vacancy periods|
|Increase in the resale value of your home||No pool, gym or facilities like an apartment complex|
|No one living beside or next to you like an apartment (minimum setbacks are required)|
Granny flats are a great way of keeping you and your loved ones connected—metaphorically and literally. The intergenerational way of living may strengthen the bond in families while still keeping a sufficient amount of independence and privacy.
Another benefit is that a granny flat could potentially increase the resale value of your home. Homes with “secondary dwellings” typically gain an increase in value.
Granny flats serve as cheaper but more cost-efficient alternatives for tenants and a good source of income for the homeowner.
For tenants, renting a granny flat on a property would obviously be more affordable as they are typically cheaper to build rather than in a unit complex investment property.
The fact that granny flats offer plenty of benefits, the process of building is getting easier. To be particular, the Government has introduced a range of incentives to encourage homeowners to invest in affordable living in New South Wales.
Now let’s look at the Cons or disadvantages of granny flats. There is also a handful, one of the biggest considerations you need to know is that you can’t subdivide. In the state of New South Wales, you are unable to build a granny flat if your property is subdivided, thus, once you are able to build a granny flat, you cannot subdivide.
Building a granny flat means there are potential unforeseen and additional costs. Although this type of property is deemed as the more cost-efficient alternative, many people overlook the additional funds that fit into their initial budget.
Another thing to consider is to be sure of your reasons for a Granny Flat and to do your homework for your particular rental market in your area.
Some tenants may not like the proximity of owners being close, which may be a disadvantage, but you would only rent to tenants that are in acceptance of this. You need to take a close look into your State and Territory Legislations when it comes to a building and leasing of the property in your area. Do your homework for your area.
The most important thing above all the pros and cons is that the good outweighs the bad.
The benefits it provides remain constant. Just make sure to do plenty of research and planning before investing in a granny flat and you’ll be sure you have made the right decision. Get quotes from companies and compare what they could offer and if they fit your budget.
The Pod Canberra build and design secondary residences. We are located in Canberra and build in the surrounding regions. Any questions please contact us.
0403 843 763 | 1300 THE POD (1300 843 763)