Building a granny flat: everything you need to know


Our experience tells us homes with granny flats often fetch much higher prices. Depending on the number of bedrooms in the granny flat, they can add anywhere from $70K-$100K to your property value. 

It’s an enticing prospect, especially if you’re looking to sell in the current slow market climate. But is it worth building a granny flat to potentially boost your sale price? Here the things you need to know to help you make this decision.


The regulations

Unlike the rest of Australia, Victorian laws are very strict when it comes to building granny flats, classifying them as a ‘dependent person’s unit’ (DPU). If you can prove the flat is for a family member under your care, it’s highly likely you’ll get approval. Depending on your council regulations, you may not even need a permit. 

Things get a little shady when it comes to using the unit after the person under your care no longer needs it. By law, it’s supposed to be removed but in reality, this condition is not enforced. Residents instead use them as a space for older children, as an office or for a home-based business, or even as a short-term rental on AirBnB (surprisingly, this is allowed but not long-term renting as an independent home). 

It’s possible the restrictions on DPUs may be lifted in the future thanks to some hard lobbying from the Housing Industry Association, real estate agents and builders. They’ve all approached the Victorian government and urged them to relax the laws around DPUs. It remains to be seen if the politicians will heed this call.



Tips for building

If you’re interested in building a granny flat, here are few suggestions:

1. Contact your council

Your first port of call should be your local council. It’s important to understand what is, and isn’t, allowed. 

2. Review your land parcel

To add the most value to your property, carefully consider if you have enough space on your block. Will building the flat compromise how you use your backyard? This might have a big impact on how future buyers’ view your home, and the subsequent price they’re willing to pay.

3. Consider the design

The granny flat should be in the same style as your current home, offering a seamless transition from the main residence. This is much more tempting to future buyer than a flat that looks like it’s been ‘dumped’ in your space.

Hopefully this has given you some food for thought when it comes to the potential opportunities a granny flat offers your property.


request an appraisal

Request an appraisal

Are you thinking about selling or renting?