GRANNY FLATS: VALUE ENHANCER OR LIABILITY?
I’m regularly asked about the merits of granny flats. Humble granny flats, or “secondary dwelling” seem to be popping up everywhere, but do they offer value-add benefits when you look to purchase or sell a property with one, or are they a liability? I’ll say from the outset that my professional opinion is that if you have the opportunity to install a granny flat, do so. And if you’re looking at a listed property that has a granny flat, view it as a wonderful asset and passive income opportunity.
It doesn’t matter whether your granny flat is attached to the main house or acts as a stand-alone building. What is important for your and your guest’s privacy, sanity – and to comply with Council regulations – is that it has a separate access. Ideally it will be fully self-contained with a bedroom, living space, kitchen/kitchenette, bathroom with at least a shower, vanity and toilet and ideally a space for a washing machine all of which offer greater appeal and flexibility of use. At the very minimum, having more space is always a good thing.
As our life-expectancy increases, we can find our parents/grandparents still active and vibrant, but not to the extent that living in their larger family home is practical. And herein lies the granny flat’s primary benefit – and the origin of its name. Having a parent in reach; knowing they’re safe but allowing them to maintain a level of independence is emotionally reassuring. And at the other end of the scale, granny flats offer excellent teenager’s retreat accommodation; a brilliant ‘transition’ space that offers a look at what moving out to an adult life might look like……although we’re witnessing the trend of young adults flying back to the family nest – sometimes resulting in despair for their up until then, carefree empty nester parents!!! Granny flats also offer brilliant accommodation for visiting friends or family members, giving everyone that vital space in order to avoid the dreaded overstayed-their-welcome scenario.
But it’s not only about older relatives, cranky teenagers and happy visitors, there are excellent financial benefits to having a granny flat. New South Wales permits rental income from granny flats, so once paid off, they can provide a steady income stream through on-going rental. Granny flats applications are generally approved by Council in 20-30 days and are relatively inexpensive to buy or build. Given this, it is conceivable that a granny flat will pay itself off in 5-7 years. It’s also an excellent tool for negative gearing and that’s a serious positive. And with the increasing popularity among travelers of experiencing a more ‘local’ life, granny flats are very popular AirB&B accommodation venues. There’s definitely money to be made.
Yet, after all these positives, you might find that guests or tenants are simply not your ‘go’ and that’s alright too. Granny flats are ideal home office, studio or ‘She Shed’ venues where you can conduct a business or unleash your creative spirit without taking up space in the main home. And again, if and when you come to sell, you have a space that may be perfect for a buyer looking for that separate accommodation venue. So, look upon your granny flat as a wonderful asset, one that certainly adds value to your property.