When looking to build a granny flat there can be a lot of confusion surrounding the topic; what is a granny flat really, and what is it not? These questions are all natural! And before delving into the depths of local legislation and official definitions, to most people, a granny flat is simply a backyard dwelling. One that allows the tenant to live away from the main house.
So that’s dual occupancy, right? Wrong – a granny flat is not dual occupancy, and this needs to be understood before making any major planning decisions. The key difference between a granny flat and dual occupancy lies in the ownership. With a dual occupancy, the owner can differ for each residence; they can stay on the same land title if you don’t intend to sell. A granny flat must be owned by the same person who owns the main residence.
When making the decision on whether to choose a granny flat build or a dual occupancy there are many factors to consider. A granny flat may be the perfect solution for one household but completely wrong for another. Dual occupancies come with their own challenges, as well as benefits, for example when you decide to sell.
What exactly is dual occupancy?
Dual occupancy is also commonly known as a duplex or multi-dwelling. They are very popular with investors and developers who like to relatively large buy blocks of land, that may or may not include a home. They subsequently demolish the home and build two brand new side by side homes in its place.
To be able to sell a dual occupancy to separate owners the land needs to be eligible for subdivision. If you build dual occupancy, knowing that you don’t fit the criteria for subdivision, you may find the property much harder to sell.
- A duplex that shares a roof between the two properties would need to be set up under a Dual-Occupancy Strata Title.
- Two homes that are essentially separate, should be sub-divided into two Torrens Titles.
The rules that govern dual occupancies differ between state and local councils, so be sure to check in with yours. For many areas, the rules have been significantly relaxed in recent years, as the government scrambles to find a way to house Australia’s growing urban population. In some areas in New South Wales, the block size required for a dual occupancy is only 400 sqm. This is less than that required for a granny flat; set at 450 sqm for NSW.
Again, the rules do vary between state and local councils so be sure to check this out before making any concrete plans.
There are a variety of design options available for dual occupancies. They can be attached and side by side, which is commonly referred to as a duplex. Dual occupancies can also be one in front of another. In this case, only one property would face the street, the other would be further back.
Some of the dual occupancy complying development guidelines for many areas of NSW are as follows:
- Block of land equal to at least 400 square metres
- Blocks must be at least 12 metres wide. For dual occupancies where one dwelling is located above another, the block must be at least 15 metres wide.
- Minimum side setback of 0.9 metres for the building. Greater setbacks are needed for wider blocks.
- Both properties must be at least 5 metres wide and no more than 8.5 metres high.
- Both properties much face the street, and can’t be directly located the other.
- Each property must have one parking space.
- Dual occupancies must be a permitted land use under the council’s local environmental plan.
What is a secondary dwelling (or granny flat)?
A granny flat is also known as a secondary dwelling, and it basically a small self-contained flat located in the backyard of the main residence. That said, there are still some very specific requirements that determine whether or not you can call your backyard flat a granny flat.
A granny flat is not a stand-alone property and cannot be sold to a separate owner. This is a key difference between the granny flat and the dual occupancy.
Granny flats have strict size requirements in comparison to dual occupancy dwellings; it can be difficult to gain permission to build a two-story granny flat larger than 60 sqm. Remember, this is a backyard flat and the intention is for it to not take over the whole backyard. It also should not disrupt the neighbours.
A granny flat can often be rented out to the public, and thus used as an investment property – but this is not always the case. In areas with strict granny flat laws such as Victoria, dual occupancy is often the preferred route for investors.
Can you subdivide a granny flat?
Unfortunately, you cannot subdivide a granny flat from the main residence; they go hand in hand! Granny flats also cannot be built on vacant land, they are a sub residence by definition.
If you are looking to subdivide your land at any point in the future, the granny flat may not be the best solution for you.
A key disadvantage of granny flats comes from the fact that they cannot be subdivided and sold separately. For this reason, they are often preferred for more than simply financial reasons.
Dual Occupancy vs Granny Flat
It can be harder to get approval for dual occupancy. It can be very hard to gain approval for a dual occupancy in some areas, and for these situations, it is often not the best path to go down. Fees can be as high as $20,000, which is inhibiting for many private build projects.
Dual occupancies are generally more expensive to build. It is often the case with dual occupancies that the main residence needs to be knocked down in order to make room for the dual occupancy arrangement. This takes greater time and financial investment than simply building a secondary residence in your backyard.
Dual occupancies can easily be rented out to external tenants. In some states and local areas, renting out your granny flat to members outside the main residence household is not allowed. If you build a dual occupancy you can live in one half and rent out the other. As a general rule, a dual occupancy residence would command more rent than a granny flat in the same area.
You can make significant capital gains on a dual occupancy build. Splitting one block of land into two properties that can be lived in and sold separately can add a lot of value. Often upwards of $100,000, and you can see a case study here. With a granny flat, it is not the same scenario, a granny flat is not always seen as a significant value add to the property in financial terms. The cost to build is often far greater than the additional value that can be added to the sale value.
A granny flat is a lifestyle choice. An important motivation for many homeowners who choose to build a granny flat is the lifestyle benefits that they can obtain. A granny flat is often used as a study, a place for visitors, a place to house older grandparents, a hangout for teenagers. Dual occupancies are mostly occupied by seperate tenants or sold to different owners, and hence occupied separately once again. The title can be deceiving!
Is a granny flat a separate dwelling? Yes, a granny flat is a seperate dwelling but its ownership cannot be separated from the main residence. It is a secondary dwelling to the main residence. In many cases, it can be rented out to third-party tenants, but in some areas, it can only be used by relatives and members of the main residence household.
What is the difference between dual occupancy and duplex? They are the same thing. A duplex is a type of dual occupancy whereby the two dwellings are attached.
Does a dual occupancy need to be attached? No, dual occupancy residences do not have to be attached. There is also the option to build side by side or with one further back than the other. There are various legislations to take into consideration with your planning.
A granny flat is NOT a dual occupancy, and it is important to note the differences when making your choice.
The multitude of choices that come with making any structural changes to an existing property are huge. And with these choices, comes the responsibility to ensure that you are fully informed and ready to make a good decision. Building a granny flat or a dual occupancy are both very good and viable options, but it does depend on your circumstance and your goals.
Before you make any serious plans, take a step back, and really consider your options. What do you want to achieve from your building project? How large is your budget? How strict is your local council? And how much risk are you willing to assume! We will leave you to reflect.