When you’re looking at downsizing, there’s a multitude of options ranging from lifestyle communities to retirement villages, caravans, and more. Another classic option is the Granny Flat.
A Granny Flat is a secondary residential dwelling, also known as a guest house, and is often associated as a place to house elderly parents.
However, these smaller homes aren’t just for Granny’s! A Granny Flat is becoming a mainstay of many a backyard across Australia. If you’re approaching retirement, wanting to downsize, or explore Australia’s backyard at your own pace yet still want to spend time with your family and grandchildren, then there are a few options for you. Today, we look at why a granny flat could be the perfect for you.
According to a recent survey by the Australian Housing and Urban Research Institute (AHURI) 43 per cent of Australians aged between 50-59 have already moved into a smaller dwelling or relocated as they approach retirement. Moving out of a big house and into a smaller space, or ‘downsizing’, is a rapidly growing trend for those who seek fewer spaces to clean and maintain – or maybe to even move away from things like stairs. Rather than attend apartment or townhouse inspections and auctions for months on end, with a Granny Flat – it’s even possible to downsize into your own backyard or that of a family member.
Granny Flats are one of the options perfect for downsizing, but this doesn’t mean they have to be small either, typically averaging around 60m2, bigger than many city apartments. While it can depend on how big the backyard land space is you have to work with, an experienced builder can expand the usable space by building on sloping, narrow or difficult areas. The benefit of building a Granny Flat means you also get to build your smaller from scratch – making it exactly the way you’d like to enjoy it.
A great Australian dream for many Baby Boomers is to hit the open road, living the classic grey nomad lifestyle. In 2019, the 55-plus age group accounted for a whopping 43 per cent of all overnight caravan or camping stays across Australia.
Some are funding their grey nomad travel adventure by selling their big empty family home and building a Granny Flat on their adult children’s property to act as a ‘base’. If you build on a family member’s property – or have your kids look after the bigger house, moving into a Granny Flat also means you can clean, repair and restock the caravan while you live comfortably in familiar bedding and extra space.
Retirement income looks different for everyone. The good news is, building a Granny Flat could be a great way to boost your retirement income at any age. From investments starting at $200k and built in under 4 months – your asset could be earning $300-500 a week in a very short space of time.
Alternatively, if you are ready to downsize, you can move into the brand-new Granny Flat yourself and rent out the bigger family home for even larger rental returns. Savvy investors who already own investment property know that in some states (like the ACT and NSW) you can build on an existing rental property, doubling down on the original investment.
Whether it was pandemic-driven isolation, affordability or just to be closer to the Grandies, another increasing trend being witnessed in Australia is multiple generations of the same family choosing to live together on the same property. As many as one in five Australians live in multigenerational households, according to a recent study by the University of New South Wales (UNSW). The reasons for multigenerational living are varied and personal but the rewards can be many. A Granny Flat is the ideal way to make sure everyone on the property has their own space when they need it.
Building a Granny Flat for your children to live in for a short amount of time is also a way to give them a leg up into the property market, and help them put money in their own pocket instead of a landlord’s.
Granny Flat’s may be a solution if your own parents are requiring additional care. One of the fundamental strengths of Granny Flats is that they provide a closeness for your family, so you can keep an eye on fragile relatives yourself, and have peace of mind in the knowledge that they are comfortable, happy, and safe with you at all times.
Keeping your elderly loved one close by means they receive supervision that’s personal, familiar, and understanding of their unique requirements. It’s a level of care that only the family knows how to provide.
Something to consider when deciding if a Granny Flat is the right fit for you is the approval process. While secondary dwelling laws vary between the states, you will need to ensure your property meets compliance standards. If it does, your build will be fairly straightforward. However, if your property does not meet the standards, the process can become lengthy, requiring a full development application.
Another thing to keep in mind if you decide to build a Granny Flat with the hopes of renting it out is the potential that you will need to pay Capital Gains tax if you ever decide to sell the property.
If you have any questions about granny flats, send them to [email protected] and we’ll have one of our experts get back to you.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.