If you’re thinking about extending your property footprint, a granny flat might be the perfect way to accomplish your goals. While a granny flat is usually intended for elderly relatives, the modern edition is versatile. Whether you have an ageing relative or want to create extra income, granny flats are a cost-effective way to diversify your property portfolio.

What is a Granny Flat?

A granny flat is a self-contained home built on land with an existing principal dwelling. It can be detached or attached to the existing dwelling, but it typically features a kitchenette, dining and living area, bathroom, and a bedroom.

The origin of granny flats in Australia harkens back to the Victorian idea of a dowager home. The widow of the property owner would remain a fixture of the land once it was sold, but she would move to a separate dwelling. In those days, the dowager home would still speak to the luxury of the grand Victorian home she had lived in, but that has evolved into the granny flats we know now.

While they must adhere to Australia’s National Building Code, the rules regarding size vary by state. There are also different building codes dictating utility lines and common driveways.

Granny Flat vs Tiny House vs Secondary Dwelling

Isn’t a granny flat just a tiny house or a secondary dwelling? Not quite.

A tiny house can be a fixed or mobile dwelling, but the goal is to downsize a more manageable footprint. Whereas, a granny flat is a smaller house that provides multigenerational living (or rental income).

As for secondary dwellings, a granny flat is a type of secondary dwelling. A secondary dwelling is also a self-contained unit on land with an existing property, but it is typically larger.

What Are The Different Types of Granny Flats?

Granny flats are versatile, so there are different types to choose from to meet your needs. The three most common options are an attached accessory dwelling, a detached dwelling, or a garage conversion.

An attached accessory dwelling unit features an exterior door to create a separate entrance, but it is usually converted from a lower-level suite or basement.

A detached dwelling is a freestanding structure on the property. It is connected to the existing utilities and has its own entrance. It may also have its own driveway, making it ideal for rental income.

A garage conversion is the simplest option. While you could still use it for rental income, this is generally the preference for people hosting family members in the granny flat. However, it’s also an excellent choice if you don’t have a lot of land to spare.

How much to build a granny flat?

The cost ultimately depends on your footprint and preferred materials, but the minimum cost is around $50,000. The most basic build features laminate flooring and cabinetry, along with weatherboard cladding. If you want a mid-range unit, you should be budgeting for around $90,000 for a home featuring softwood cabinetry and flooring and affordable metal roofing. On the other end of the scale, you can spend as big as you want for the best materials, features, fixtures, and fittings.

Don’t forget to factor in the costs of site surveys, excavation and levelling, and risk assessments. You can keep the costs down by building up rather than out or using a specialised broker for the financing to ensure you get the best deal.

Factors That Influence the Cost of Building a Granny Flat

There are various factors to consider as you create the budget and all of these could influence the cost of your construction project.

Size

If you want more than a one bedroom granny flat, that’s going to increase construction costs. Typically, the limit is two bedrooms, but you should check with local council regulations to be sure. If you want to build a granny flat between 30 and 60 square metres, you should aim for a budget of $100,000 to be sure.

Materials

The materials you want to use for your build will be a major factor in costs. Choosing large windows for natural lighting and wooden siding is going to cost considerably more than vinyl siding and standard windows.

Move-in Ready

Many granny flat building companies offer turn-key granny flat packages so when the keys are in your hands, everything is taken care of including furnishings. It comes with a higher price tag, but it’s less stressful. Add $20,000-40,000 for all the bells and whistles, bearing in mind you get to choose the décor.

Building Site Conditions

The site condition can heavily influence the cost if there’s wild, untamed land to contend with. Site excavation costs vary wildly, and if there are trees to remove and grass to cut before the levelling can start, it’s going to cost considerably more to prepare for construction. Levelling can cost up to $20,000, but in addition to the condition of the site, the size of the flat will also factor into the cost.

Location

Ultimately, costs will vary depending on your location.

What are the benefits of building a granny flat?

With all the options you have, why should you choose a granny flat over a tiny house or a second dwelling?

Rental Income

Building a granny flat doesn’t need to be about accommodating an elderly relative, it could be a clever way to own a second property to create rental income.

Property Value

Estimates suggest a granny flat could increase your property value by as much as 30%. You can benefit from the rental income now and reap the rewards again if you decide to sell your home and move elsewhere. Think of it as future-proofing your investment.

Future-Proofing Your Retirement

Speaking of future-proofing, many people build a granny flat now, maximise the rental rewards, and use their dwelling to downsize when the time comes. You can either rent out the big house or sell it if you can create separate titles.

Office Spaces

If you work from home, you know how chaotic it can be when you’re trying to handle your business. A granny flat delivers a private, peaceful office space and if you head back into the office, you can use the space for something else.

Examples of Different Granny Flat Budget Ranges

Whatever your budget, there’s likely a granny flat for you.

On the lowest end of the scale, a barebones dwelling with the cheapest siding, fixtures and fittings can be built for as little as just $50,000. These dwellings are unfurnished and you can choose low-end furniture to finish it or hit the op shops to upcycle.

In the middle of the scale, with a spend of around $90,000, you can purchase a factory-constructed granny flat with the average siding, fixtures, and fittings. There isn’t a lot of customisation available.

If you want to fully customise your granny flat and pick and choose the ideal materials to tick all your boxes, then you need to look at the high-end granny flats. You can install solar shingle roofing to optimise your utility usage, lay marble flooring in the bathroom or opt for a stone kitchen countertop. Or soundproofing for recording studios. However, you will need to double your budget.

3 Tips to Reduce Granny Flat Building Costs

If you like the sound of building a granny flat, but you’re worried about the potential hidden costs, we have some ideas to help you stay within your budget.

• Instead of a “second dwelling”, consider building up.
• The financial side of the project should be tightly controlled, but you can also manage your money better by using a specialised property broker. They will ensure you get the best mortgage, the best advice, and the best financing.
• You can get around certain rules and regulations by being creative in your construction. For example, you might not need a permit if you build a studio, meeting space, or home office. Use the space as a rental unit and then add a bedroom once it’s generating enough income.

Summing Up

Building a granny flat is a clever investment, whether you’re future-proofing your investments or retirement or you need a safe space for an elderly relative. With a variety of building options available, you can customise as much or as little as necessary to maximise your budget.

Provincial Homes offers a design range of Granny Flats, whether you’re looking for an investment property or a compact living solution. Our designs are developed to optimise every square metre of land, delivering two and three-bedroom dwellings with modern facades, luxury inclusions, open-plan living, and spacious accommodations.

Frequently Asked Questions

Should I be worried about hidden costs?

There are almost always hidden costs with every construction project. Many people forget to factor in council approval processes, inspection, survey, and risk assessment costs. However, a contingency budget can put your mind at ease.

Are granny flats a good investment?

If you’re thinking about building for investment purposes, then a granny flat is a solid choice. According to realestate.com, Sydney’s median rent per week is $730. So, your investment could pay dividends in no time at all, depending on which end of the building scale you choose.

What makes it a granny flat?

By definition, it’s simply a dwelling on a property with an existing home. A granny flat has its own kitchen, living area, bathroom, and entrance. However, states vary the definition based on size restrictions.