Granny flat - investment no-brainer

Which of these adds value to your property and increases the rental income you can receive from the property?

  1. Granny flat
  2. Secondary dwelling
  3. Auxiliary unit

The answer is - all of the above as they’re all different terms describing what is commonly known as a granny flat.

The granny flat boom has been going strong for quite a few years, aided by the 2009 changes in NSW legislation (Affordable Housing State Environmental Planning Policy - SEPP) which made it possible for granny flats to be built in all residential zones and be approved as a complying development in just ten days, subject to minimum requirements.

In addition to the continuing demand for affordable rental properties, increasing difficulties for first home buyers to find a property in their price category mean that young couples are now more likely to rent a granny flat while continuing to save for their deposit for their dream home.

Investment-savvy homeowners are adding granny flats to already existing properties - as a google search reveals, the granny flat building business seems to be doing well - but there’s also a strong demand for new-built homes which include a granny flat.

While most property listing websites don’t (yet) offer the option to search for “granny flat” in particular, does and provides the data to backup the steady increase in tenants’ interest: “Granny flat listings as private rentals on the site increased by 16 per cent in 2016, nationally, while searches for granny flat accommodation increased by 84 percent in the last quarter alone. More and more renters are opting for granny flats over share housing and savvy homeowners can capitalise on this.” (

If you’d like to approach this investment carefully, have a look at this Domain article that points out potential downsides to consider when investing in a granny flat, such as the fact that they cannot be put on a separate ownership title to the main house, which means that they cannot be sold separately.

However, for Prudential Real Estate Director Graeme Paddock, the granny flat is a “no brainer” for investors and he reports that the sales of properties with granny flats have tripled compared to 2016. You can get a granny flat built for between $100,000 and $150,000 (not $10,000, as Graeme was incorrectly quoted in this article) and receive around $300.00 per week in rental income. Graeme receives many enquiries about properties with granny flat potential and advises that these properties are generally on the market for shorter periods of time than other investment properties.

If you are interested in investing in a property with granny flat, contact your local Prudential Real Estate office today or sign up for our VIP property alerts

(October 2017)