Gran Designs
They’re cheap, easy to construct and come in a load of smart designs. In states like NSW, the government has freed up planning constraints, so a granny flat can be approved as complying development in as little as 10 days.
This project in Sydney’s outer western suburbs, which I completed in July 2014, included the addition of a 2-bedroom granny flat at the rear of the original property, with its own exclusive rear lane access.
The strategy
The original three-bedroom, 1960s fibro house is located on a 670 square metre level block, with rear and side lane access. The location of the house and multi access points presented the opportunity to construct a granny flat at the rear.
Plan of attack
Given the lead time necessary for the required planning consent for the granny flat, we got the balling rolling with council as soon as possible. While relatively straightforward, the all-up cost of getting the green light was around $2500.
With no formal sub-division required, a new paling fence was erected to split the house at the front from the new rear dwelling, providing separate access from the rear lane, making it completely self-contained. The existing shed on the site was demolished.
I purchased a “bare shell” 2-bedroom granny flat with awning from local supplier, Metal and More (www.metalandmore.com.au), which I had my own tradies fit out, to save costs. As they were already in full swing renovating the main property, and therefore on site, labour costs were kept to a minimum. Some minor work was necessary to connect water and electricity.
Let the figures speak
The granny flat currently rents for $350 a week, returning a whopping 24.3 per cent gross rental yield – in a suburb where the average is 5.15 per cent and the vacancy rate is 1.5 per cent. Property prices in the suburb increased 25 per cent in the 12 months to November 2015, reflecting the heat of Sydney’s property boom.
Law and order
Not every state permits granny flats so be rented out to non-relatives, so be sure to check what the rules are in your council area before you take the plunge. As granny flats grow in popularity, the different choices available have also greatly improved, so just Google what’s available in your area and you’ll be amazed at how sophisticated some of them look for the budget price tag.
Granny facts
Your typical granny flat comes in one-, two- and three-bedroom configurations. Maximum square metres allowed varies from state to state; count on between 60 and 80 square metres maximum. The average cost is around $80,000 to $120,000, depending on the number of bedrooms and quality of finishes. As with kit homes, inclusions and optional extras will vary enormously, so do your research. Some offer a basic kitchen/bathroom package and options to upgrade to the deluxe version, and there’s generally a choice of interior/exterior finishes. Be sure to talk to your local council first if you’re considering a granny flat, as there are regulations around what is and isn’t permitted, and you’ll need to obtain the necessary planning approval. In some cases, you may only need the services of a private certifier, but check what rules apply in your local area.
FINAL COST BREAKDOWN
- Cost of granny flat*: $75,000
- Current weekly rental: $350
- Gross rental yield: 24.3%
- Suburb average rental yield: 5.1%
*Excluding original land cost
