In this interview, Chad Dunn of AcquiredHQ Buyer Agents spoke with Jack from Malora Homes and Granny Flats, the leading granny flat builder in the Newcastle, Lake Macquarie, and Hunter Valley region.
We discussed the ideal attributes of a block of land for building a granny flat, compliance requirements, investment considerations, foundation types, design preferences, modern inclusions, financing options, and cost estimates. Here’s the transcript:
Chad Dunn (AcquiredHQ Buyer Agents):
Hi Jack, as the leading granny flat builder in the Newcastle, Lake Macquarie, and Hunter Valley region, what attributes in a block of land are ideal for a granny flat?
Jack (Malora Homes and Granny Flats):
Larger blocks lend themselves to a more favorable outcome, as access and yard space are allocated for both the primary and secondary dwellings. On average, a 500m² block can achieve a great layout; however, smaller blocks can still work.
Yes, corner blocks are great, as you can achieve street frontage for the secondary dwelling. Corner blocks may also have the opportunity to approve the dwelling as a dual occupancy, with separate services and the option to subdivide straight away or in the future when ready to do so.
If you are an investor looking for a property to build a granny flat, it is best to avoid flood-prone blocks and Guideline 1 mine subsidence blocks. These hazards ultimately add additional construction and engineering costs to the project.
Chad:
What does the site/project, have to meet? to get complying development.
Jack:
The 6 main criteria that need to be met for a complying development (CDC) granny flat are;
- A minimum block size of 450m2
- Residential zoning (R1, R2, R3, etc.)
- A block that is 12m wide at the building line of the existing primary dwelling
- Positioning the granny flat with a 3m setback from the rear boundary
- Maintain 3m clearance from any existing trees that are greater than 6m in height
- Avoid an acid sulphate soil, class 1,2 or 3 (4 or 5 are acceptable)
Chad:
I know as a busy Buyers agent at AcquiredHQ, buying for investors and family buyers, I am starting to get a lot of interest in people looking into granny flats. Why are most of your clients calling Malora Homes buying/building them? eg: is it to accommodate in-laws or children or for extra income?
Jack:
Currently it is a 50:50 mix of investors looking to place a tenant in for additional income, or owner occupiers looking to accommodate family members. A few years ago it was more like 80% of the market for investment purposes, and 20% for owner occupier.
Chad:
Jack, what type of foundation is best that a purchaser should be considering? For example, to go on stilts or slab?
Jack:
A slab is always best where possible, as it’s more favorable for the energy/thermal assessment with the BASIX certificate. Traditionally, a slab is also cheaper.
Chad:
As a buyers’ agent, I always suggest people never buy less than 2 beds. In your experience regarding granny flats, what is better: 2 bed or 3 bed or two ensuites?
Jack:
A 2-bedroom granny flat is the sweet spot. One-bedroom and 3-bedroom granny flats are quite rare. Even with a single occupant, the second bedroom of a granny flat is very appealing as either a spare bedroom or home office/storage.
Chad:
Jack, granny flats seem to have changed as much as caravans have these days. What kind of finishes/inclusions are available these days? How do they differ from 20 years ago?
Jack:
Inclusions have come a long way over the past 10 years. Stone benchtops are typically standard for most builders, and numerous new cladding options are available. Great decking options with products such as ModWood are also now available, giving investors low-maintenance solutions. Things like air conditioning are standard, even a clothesline and a letterbox!
Chad:
Is it hard to get finance for a granny flat?
Jack:
Granny flats have the ability to achieve extremely good rental yields. It is not uncommon to see investors attain a return of 12% to 14% and higher. This enables positive cash flow from day one, which is typically seen as extremely favorable from a lender.
Chad:
So Jack, as a buyers’ agent, my clients’ first question on granny flats is generally, “Roughly what is the price range?” as I have seen some places promoting grannies that seem too cheap to be viable.
Jack:
The price to construct a 60m² secondary dwelling is around $140,000. However, with design and approval costs, local council contributions, and an average allowance to put up a fence and finish off some landscaping, a full package typically ranges from $180,000 to $220,000.
There are cheaper modular and transportable granny flat options in the market; however, they are often smaller and do not come with certifier or council approval. Modular and transportable granny flats also add little to no capital value to a property. The rental return on these types of movable homes does not perform as well as a granny flat built on-site. Transportable granny flats (or tiny homes) are also not built to the National Construction Code and Australian Standards, nor do they have a 6-year structural warranty period.
Additional Insights
For those considering investing in or building a granny flat:
- Market Trends: The shift from predominantly investment purposes to a balance with owner-occupiers indicates a growing demand for multi-generational living spaces.
- Design Considerations: Modern granny flats offer high-quality inclusions and finishes that rival traditional homes, making them more attractive to tenants and family members alike.
- Regulatory Compliance: Meeting the CDC criteria is crucial for a smooth approval process. Always consult with professionals to ensure compliance with local regulations.
- Financial Benefits: High rental yields and positive cash flow can make granny flats an attractive investment. However, it’s important to consider all costs involved to gauge the true return on investment.
- Quality over Cost: While cheaper options exist, investing in a quality build that meets national standards will offer better long-term value, both in rental income and property appreciation.
Contact Information
Looking for a buyers agent in Newcastle, Port Stephens and other coastal areas in this part of NSW? Chat to AcquiredHQ today:
Talk to Chad Dunn for expert and confidential services
For more detailed information or to discuss building a granny flat:
Jack
- Company: Malora Homes and Granny Flats
- Website: Malora Homes
- Phone: 0413 557 377
- Email: jack@malorahomes.com.au