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The booming popularity of granny flats as investments

During 2018, over 10,000 granny flats were built in Australia, according to the Housing Industry Association. The humble backyard shed has been replaced by a polished, liveable mini-home that functions as extra space or income for the property owner.

Why are granny flats so popular all of a sudden? And is installing a granny flat a good idea for you?


The boom in the popularity of granny flats is at least partly due to the strain of high property prices nationwide. Having an extra detached space can help ease the pressure by:

  • Allowing friends or family to share one property, reducing costs.
  • Functioning as a tenanted investment to help cover a large mortgage or supplement income.
  • Keeping large families together.
  • Adding value to your property to boost capital gains.

Best of all, adding a granny flat is far more affordable than buying an additional property. CoreLogic estimates installing a one-bedroom flat could cost as little as $120,000, while a two-bedroom should cost around $200,000.

Granny flats are most popular in NSW where over 6,000 were built last year, followed by Queensland with 2,365 and the remaining states with under 1,000 each.


Adding a granny flat to your home as an investment is a smart, low cost way to boost your income and the value of your property. Follow the steps below to make sure you get it right.

  1. Know the local regulations

Granny flat regulations vary from state to state. In Victoria, for example, you’re not permitted to build a granny flat on your land unless the person who lives in it is dependent on you. When that person moves, you must also remove the granny flat in most cases.

Before you start your build, you should check the regulations with your council or state government to ensure that you are able to build and that you know what limitations may apply if you do.

  1. Choose the right builder

The builder you choose will decide whether your granny flat is a success or failure. Go for someone who:

  • Is reliable, punctual and transparent.
  • Specialises in granny flats.
  • Has relevant insurance.
  • Offers a wide range of design options.
  • Uses well known reputable suppliers.
  • Is a licensed builder.

It’s also worth asking to see one of their previous projects so that you can walk through and see the quality of craftsmanship first hand.

  1. Know the costs

Always, always get at least three quotes from reputable companies before choosing a provider and starting your build. Ask each company for an all-inclusive quote and make sure you understand clearly the cost of any additional work that may be required (e.g. connecting of services like plumbing and electricity).

Once you’ve got these quotes, make sure you can afford the build without any financial stress and pick your favourite builder.

Hint: cheapest isn’t always best.

  1. Prioritise liveability

If you’re going to be using your granny flat as an investment, it needs to be somewhere that tenants will want to live. That means it should have plenty of natural light, a private or semi-private entrance and a functional, attractive design. Adding features like a small deck, premium fittings or split system heating may cost more, but they may also allow you to charge more rent and increase the flat’s value.

Granny flats are booming in popularity right now. If you do your research and choose the right builder, you too could supplement your income and pay off your mortgage faster with the help of a new granny flat.