Last month the Victorian Government announced in its Housing Statement The decade ahead/2024 – 2034 that planning permits will no longer be required to build a second home (aka granny flat) on properties over 300sqm. This means the issue of flexible housing and its impact on the economic and social fabric of our Melbourne communities will be the topic of talk in 2024. How will it affect your financial position as well as the mental health & well-being of people you know?
What you need to know:
- If you have a property on 300 sqm or more with no flooding or environmental overlays, you will not need a planning permit to build a second home/granny flat.
- The granny flat needs to be under 600 square metres.
- You will not be able to subdivide your property or sell the second home separately from the main home.
- You will be able to rent it out for an additional income and this includes Airbnb or a room to board. I checked online sites such as, GrannyFlat rental on Facebook and a typical example was on Flatmates.com.au which had a 1 bed, 1 bath 2 person granny flat in Ashwood available for $400wk including bills & internet.
- The cost to build a 60m2 will vary from $120,000 – $150,000 according to Backyard Grannys but of course it depends on size, extravagance and if you DIY.
- You will need to insure the building & contents and you will need to declare income for tax and depreciation purposes, check with the appropriate finance specialists.
Why it matters:
Individually: You can add value to your property, and you can more easily become a property investor.
Socially: You can provide more affordable housing and you can help create a safer and social option to those in need.
Historically, the granny flat was designed to enable elderly relatives to stay close to family and away from aged-care facilities. Once the property was sold, they were often knocked down if a young family bought the property so the kids could have a big backyard. Nowadays, priorities are shifting to working from home studios, self-contained studios for au pairs, students wanting to save a deposit for their first home and homeowners/rental providers wanting to pay off their mortgages.
Two income streams from one property sounds good and so does the provision of a temporary housing solution to people in need, such as those fleeing domestic violence – www.safehavencommunity.com.au where you can register a spare room for example.
The more properties in your neighbourhood accommodate higher density living and more flexible housing, the more diverse the neighbourhood will become. This could come with a potential downside; of transient and unreliable neighbours but it also could bring; more flexible child-caring duties and social support networks to combat the loneliness & mental health epidemics. Communication in entire streets will become key to enable consistency and trust. Does your street have a communication hub?
My experience:
The self-contained studio I built in my backyard was only completed in March 2022 after construction took all of 2021 (covid delays) but applications and approvals started in 2018! It shouldn’t be that arduous. My plan was to help my kids save money for their own home but also, to offer them (and my community) a refuge from the challenging times in life, such as during divorce or illness. And almost 2 years on from the completion of my self-contained studio, and my middle child moving out and away this week and my oldest moving in, I can happily say my neighbours are still my friends!
Last year I bought a home for a client with a self-contained “granny flat” at the back of the backyard. I had managed the sale of their family home so they could downsize after raising 3 kids but as one of their adult kids would never be fully independent, they needed this as a “respite” for their health as well as for the adult child’s well-being. This is not the first or the last time, that I will buy homes with flexible living options for multiple purposes. In inner city properties, I am more often seeing a studio above the garage or instead of a garage due to minimum space and on larger blocks, I have seen the pool house become a mini-house – 2 beds, bath and separate kitchen and living.
If you have any questions or comments or would like to share your experience, it is all welcome.
And, if your home has space for more adaptable accommodation or you would like help to find one that does, please feel welcome to reach out to discuss the possibilities.