POP GRANNY OUT THE BACK IN THE GRANNY FLAT!!!

The li’l shack out the back where you used to pop Gran to keep a good, close eye on her has now become a neat investment thanks 2 news laws set out by The State Government.

Where they used to only be allowed for a dependent relo, they can now be approved quite easily & built for a song then rented out to a tenant for a substantial rental yield.

There’s  more and more talk about investors using granny flats to maximise their rental yields. This is an increasing trend occurring in New South Wales as a result of changes to the planning laws back in July 2009.

The State Government made the changes to encourage greater supply of affordable housing in a climate of chronic under supply. It was a clever move and a fantastic win-win idea. With every granny flat built, a new home is made available to tenants, generally at a lower price than an apartment – a big win for tenants. And because they cost very little to build, the yields on granny flats can be well over 10 per cent – so a big win for investors.

The new laws made it easier to get approval for granny flats and they also allowed them to be rented out. Previously, granny flats were only allowed for a dependent relative such as a teenager, or obviously, a grandparent.

While you can build a granny flat out the back of your home and rent it out positively geared, you can also add a granny flat to an existing investment property to increase the yield. In some cases, adding a granny flat can turn a negatively geared investment into a neutral or positive one overnight (as long as you can find a tenant and there can be issues with this, which I’ll get into later).

Granny flats are also cheap to build. There’s a number of advertisements for granny flats, fully installed, for less than $70,000. Obviously, you’ll pay more depending on the size of the flat and how many rooms you put in it. Say you spent $80,000 and rented it out for $250 per week. That’s a remarkable 16 per cent yield. Of course, yields vary nationwide, so it’s a good idea to talk to us about how much a granny flat in your area typically rents for to determine your potential income.

Unfortunately, the opportunity to rent out a granny flat is only available in NSW, Tasmania, the Northern Territory and, as of December last year, in the city of Fremantle, Perth. Tasmania and NT have more restrictions in place than NSW, such as the flat having to share connections to essential services with the main house.

Here are the basic rules for granny flats in NSW. If you can meet these criteria, you’ll get approval very quickly through a private certifier or your local council:

• Your block size must be a minimum 450 square metres
• Your block must have a minimum 12-metre frontage
• You need a three-metre clearance between the flat and the back fence
• You need about a one-metre clearance between the flat and the side fence
• The floor area of the flat can’t exceed 60 square metres
• The floor area of the flat and the main residence can’t exceed local council restrictions
• The height restriction is 8.5 metres.

Interested? If you do a quick Google search, you’ll find many companies specialising in granny flats. Check out some of the designs and you’ll be pleasantly surprised. Granny flats are no longer drab little cottages; there are plenty of stylish designs available that will appeal not only to you but also to your prospective tenants.

Be sure to click on the attached PDF for all the conditions….Affordable Housing Fact Sheet 2012

Go the granny flat!!!!!!!