Have you ever considered building a granny flat?
With Perth experiencing rising rents and tight vacancy rates, now could be the right time. We delve into everything you need to know.
Perth granny flats
A granny flat (the official name is ‘ancillary dwelling’) is a small, self-contained home built on the same lot as another single house. We tend to imagine granny flats as a separate building at the bottom of the garden, but they can be attached to the main house or integrated within the main house too.
Prior to 2013, WA planning regulations only allowed a direct family member of the main house to live in a granny flat, but now they can be lived in by anyone, including tenants.
Do granny flats add value?
Not only could a granny flat boost the value of your property, but it could also be a new source of income.
Rents rose dramatically across Perth in the 2020/21 financial year, and rental vacancy rates are at their lowest in almost a decade. With such high demand for affordable housing, homeowners across the city could earn rental income from a granny flat on their property.
According to a 2019 CoreLogic / Archistar report, a granny flat could increase home values by 30% and add around 27% to rental income.
Building a granny flat in Perth
The planning regulations that apply to granny flats differ from one local council to the next, including minimum lot size, maximum floor area and parking requirements. State planning policy allows for a maximum ancillary dwelling floor space of 70 square metres but check with your local council for the rules in your area. Only one granny flat can be built per lot, and you’ll also need approval from the Water Corporation.
There are many companies that specialise in building granny flats, but it’s also perfectly legal for any registered builder or owner-builder to construct a granny flat. They can be custom designed and built, or there are kit or prefab granny flats available too. A granny flat must have received correct building and planning approval before it can be rented out.
Renting out your granny flat
Because a granny flat tends to rent for less than a typical apartment, they’re ideal for renters on a budget. It also means granny flats are especially appealing at times of rising rents and low rental vacancies like we’re experiencing in Perth now. Although there are no rules about the number of people allowed to live in a granny flat, because of their limited size they tend to suit singles, couples or small families.
A person renting a granny flat in Perth could either be a tenant under the Residential Tenancies Act or a lodger, which means common law would apply. A tenant is more likely to have the right of exclusive possession of the granny flat.
Regardless of whether the renter is a tenant or a lodger, renting out a granny flat differs from traditional renting arrangements where the landlord and tenant live in two separate places. Both landlords and tenants need to think about the day-to-day practicalities of living on the same property and sharing some areas and facilities (such as driveways, paths, gardens, laundries and bins) with someone they don’t know. It’s important to be clear about which parts of the property will be for the exclusive use of the tenant, and what the arrangements are for sharing common facilities and spaces. Will the rent cover water and power, or will they be billed separately? And how will the buildings and contents be insured? Setting clear boundaries and expectations will lay the foundations for a successful granny flat tenancy.
Thinking about building or renting out your Perth granny flat? Get in touch with our specialist property managers for more expert advice.