How Modern Granny Flats Are Increasing Rental Returns Across NSW

Since the NSW State Government relaxed the granny flat legislation allowing for granny flats to be built on blocks larger than 450sq m, investors have continued to build them due to increasing granny flat demand and, and in some cases, a well-designed modern granny flat is doubling the rental return for investors.

The modern granny flat creates the opportunity of a second income stream by offering a separate fully contained private living space within an existing property. The main reasons granny flats are proving so popular is to accommodate extended family in multigeneration homes whether it be the younger or older generation

Traditionally, granny flats were built to accommodate ageing parents and that’s still very popular today given Australia’s ageing population. However, granny flats are also proving popular as more young people are choosing to live at home longer with mum and dad. Granny flats are also a popular option with single parents and even in some cases, divorcing parents who are waiting up to three years in NSW to finalise their divorce are now also looking for properties with a granny flat as an interim move, hoping for less impact on the children.

Most granny flats are built under Complying Development legislation that restricts the size of the granny flat to 60sq m, and with modern design, the open spaces created feel large and let in lots of natural light. Most granny flats have two bedrooms, a bathroom, kitchen, and laundry with an  out outdoor deck.

When it comes to planning to build a granny flat, there are a number of factors that can require an application to council, including when the block size or dimensions do not meet the requirements for a complying development, or the height of the building can be a factor particularly with sloping blocks.

For investors looking to do a knockdown and rebuild project, adding a granny flat in the backyard and using the same builder for both projects will save you at least 10 to 15 per cent on the cost of the granny flat as compared to just building a granny flat as a single project.

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