With rising housing costs, granny flats are becoming an affordable alternative for homeowners and tenants across NSW. These secondary dwellings offer a budget-friendly rental option, and the NSW government encourages their use to help alleviate housing demand.
However, there are legal regulations for renting a granny flat in NSW that homeowners must follow to ensure compliance and avoid penalties. In this article, we’ll explore the key regulations and steps needed before renting out a granny flat in NSW.
Who Can Rent Out a Granny Flat?
If you’re trying to find a house with a granny flat to rent, you’re in luck! Anyone can rent out a granny flat in NSW as long as they follow the local legislation.
As per the Affordable Rental Housing State Environmental Planning Policy, homeowners can build a granny flat or a secondary dwelling on their home and rent these dwellings to tenants, but they cannot rent out a granny flat to a family member.
As mandated by Fair Trading NSW, granny flat designs must be approved by a certified accreditor before construction. If the building doesn’t meet the standard, landlords can face heavy financial penalties.
Of course, it’s better to pay these penalties than deal with a tenant injured due to non-compliance in the design and construction. So, it’s important to know all about the local legislation of your council before constructing and renting out a secondary dwelling.
The Approval Process of a Granny Flat
Follow the given steps to build and rent out a granny flat:
- Get approval for all the work. To begin, you can lodge a Development Application for your primary and secondary dwellings. Your local council will approve this application or you can get a Complying Development Certificate from a private certifier.
- After the approval, build your granny flat.
- Get the Occupation Certificate (OC) for your granny flat. This certificate ensures the authorization of the occupation and allows you to use the new building or a section of it. To get the OC, ensure there’s no incomplete construction that can cause health or safety issues to residents.
- Construct the main house if you have not already.
- Get the final Occupation Certificate for all construction within five years of the first OC. The first OC is issued for the partially completed development of the building on the condition that you get the final OC for the complete development of both the primary and secondary dwelling within five years of the issue of the initial occupation certificate.
Where Can I Build Secondary Dwellings?
Secondary dwellings can be built in residential zones, including R1, R2, R3, R4, and R5.
Under a council’s Local Environment Plan, you may also be permitted to build secondary dwellings in other zones; as per the Affordable Rental Housing State Environmental Planning Policy, secondary dwellings must comply with many additional requirements and standards.
A Few Additional Tips
To get the most out of your rental granny flat, you should follow these tips after getting the approval of your local council:
1. Talk to Your Local Real Estate Agent
You must win local council approval to build and rent secondary dwellings. After that, talk to a local real estate agent about the demand for granny flat rentals in your area.
Ask about the rental market trends in your area, including the average weekly rent, what type of tenants are looking for a granny flat in your area, and what features and facilities these tenants are looking for.
2. Consider Tenant Requirements
Tenants have tons of options for renting today—they can share houses or live in studios or condos. Apartments and granny flats can be similar in size, so it can be necessary to enhance the appeal of your granny flat by making a few significant changes.
To stand out from apartments in your area, figure out what your dream tenants are looking for and try incorporating those features. If you’re considering other cities in Australia for property investments, make sure you learn the requirements to rent out property in Sydney.
If you’re apartment hunting in Australia, we have just the thing for you—install the Soho app now or check out our website to get listings based on your preferences, whether it’s a granny flat in NSW or renting a home in Melbourne from the owner.
FAQ: Legal Regulations for Renting a Granny Flat in NSW
Is it legal to rent out a granny flat in NSW?
Yes, renting out a granny flat in NSW is allowed, provided you meet all local council regulations. Check specific requirements with your local council or consult a specialist to ensure compliance.
What are the rules for granny flats in NSW?
Granny flats must not exceed 60 square metres in internal space. The property lot should be at least 450 square metres, and only one granny flat is permitted per lot. The maximum height allowed is 8.5 metres.
What is the granny flat rule for Centrelink?
Centrelink’s granny flat interest rule allows an older person to invest assets to secure lifetime living rights. This investment is then excluded from the Centrelink asset test, which helps qualify for certain benefits.
Do you need approval for a granny flat in NSW?
In NSW, granny flats can be built without full council approval as “complying developments” if they meet specific site and design criteria, such as a minimum lot area of 450m² and a 12m width at the building line.
Can I Airbnb my granny flat?
Yes, many people rent granny flats as Airbnbs, especially in tourist areas, as a way to earn extra income. Ensure you meet any local council guidelines for short-term rentals.
What is a granny flat for rent?
A granny flat is a secondary dwelling on the same title as the main house, usually accommodating one or two people. It can be rented out or used to house family members.
Is a granny flat dual occupancy in NSW?
No, a granny flat is considered a secondary dwelling, not a dual occupancy. It cannot be subdivided or sold separately from the main property.
Is a granny flat considered an investment property?
Yes, granny flats can serve as investment properties by generating rental income. They are cost-effective to build and maintain, providing a steady income stream for property owners.
What class is a granny flat in NSW?
Granny flats are classified as “secondary dwellings” in NSW and are permitted in residential zones R1, R2, R3, R4, and R5.
