Building a granny flat adds value to your home and could create a new revenue stream.
More than half a million homeowners across Australia’s eastern seaboard have enough space on their property to build a granny flat, which could boost home values by 30 per cent and add around 27 per cent to rental income.
Combined analysis by CoreLogic and Archistar identified 583,440 properties in Sydney, Melbourne and Brisbane that meet the criteria for an additional self-contained unit of at least 60 square metres.
Constructing a two-bedroom granny flat would require an initial investment of around $200,000, while the outlay for a one-bedroom dwelling would be approximately $120,000.
CoreLogic Head of Research, Tim Lawless said: “Building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market.
“Not only can it help to manufacture new capital gains, but it has the potential to generate rental income while meeting demand for more affordable housing.”
A granny flat typically rents out for less than the price of a standard apartment, making it an attractive and affordable option for renters on a budget.
“Many properties identified as suitable for a granny flat are in densely populated and traditionally expensive areas, such as Sydney’s northern beaches or Hornsby,” Mr Lawless said.
Co-founder of Archistar, Robert Coorey said: “Many home-owners are sitting on a pot of gold in the form of excess land that could be developed to generate a new income stream.
“The family benefits of a secondary residency can’t be overlooked, whether that’s giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors,” he continued.
The building of a second residence on your property or on a family member’s property also opens up the option of entering into a ‘granny flat agreement’.
A ‘granny flat agreement’ is an informal arrangement between a parent and their adult child or children.
The parent (often elderly) contributes the funds to create granny flat accommodation either by modifying a home or by buying a suitable property in the name of the children. In return, they agree to provide the parent with a lifetime right to live in the granny flat, or at least until the parent needs residential care.
Many of these arrangements work out well. The older person can enjoy the love and support of having their family close by as they age.
Do you have room to build a granny flat on your property? Is this something you would consider to open up a new income stream in retirement?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.