Home' API Magazine : June 2014 Contents 103
API JUNE 2014
JUNE 2014 API
Granny flats in Canberra just
became a whole lot more profitable,
thanks to exciting changes
to the Australian Capital Territory’s
Investors can finally make a little extra
cash rather than putting up with mum
and dad or gran and grandpa out the
back. Not that there’s anything wrong
with living with parents, of course. It’s
just that, well, there’s only so many times
you can ask someone to turn down the
volume on the remote control before
enough is enough.
Now granny flats can be rented out to
anyone and you don’t have to be related.
Variation 306 removed restrictions on
who was permitted to occupy what was
previously called a ‘habitable suite’ or
Environment and Sustainable
Development Minister Simon Corbell
says the fact anyone can now occupy
a granny flat allows for more affordable
housing. So it’s a win for renters seeking
affordable accommodation, a win for the
government seeking to make better use
of land and most importantly a massive
win for investors, who can now drastically
increase their rental yield on a property.
Knight Frank Canberra valuer Jordan
Hayes says granny flats are certainly “a
very lucrative way to gear an investment”.
He says the changes mean investors
can now rent out a property and a granny
flat, or live in the property at the front
and rent a granny flat out at the back.
“It’s a really good way for people to get
on top of mortgage repayments,” Hayes
says. “Rents in Canberra are fairly strong.
The competition you would have would
be the extent of unit developments where
there’s a lot of supply, but typically you
see granny flats are in more established
suburbs, where there’s less competition.”
Those areas include Flynn, Scullin and
Page, out around Belconnen, and also
Richardson, Calwell and Chisholm in the
You don’t need to have separate
driveways to build a granny flat. However,
you can’t put a granny flat on a separate
title and then sell it separately. You’ll
also need to have a block that’s at least
500 square metres. Hayes says there’s
no point buying a 700 or 800-square-
metre block in a blue-chip area such as
Yarralumla, because buyers of prestigious
properties probably don’t need the cash
flow that comes with having a tenant in
the backyard and, if anything, it might
devalue the property. At the other end of
the spectrum, new estates wouldn’t have
the space, so aim for the middle range.
“In developing suburbs the block sizes
are smaller so generally there’s not a lot of
room out the back,” he says.
The Real Estate Institute of the ACT
president Michael Kumm says investors
aware of the changes are already
swooping on properties with larger blocks.
“Most of the enquiries are for properties
you can knock down, so you can build
a new home and also a new granny flat.
They’re looking for a large block with a
northern aspect,” he says.
Another bonus is that granny flats can
now be 90 square metres, rather than
the previous allowance of just 75 square
metres. It might not sound like a lot but if
you’re an investor who owns a house and
granny flat, or a house with a block that’s
big enough to fit a granny flat, an extra
15 square metres might be the difference
between someone willing to rent a smaller
space or turning their back on the idea.
Hayes says a one-bedroom granny flat
would rent for about $200 to $300 a week,
whereas a two-bedroom granny flat would
rent for about $300 to $350 a week. So
that extra 15 square metres could allow an
investor to add an additional bedroom to
their granny flat and give them as much
as $150 extra each week.
“What you’ll probably see now is a trend
towards two-bedroom granny flats, rather
than single-bedroom granny flats. A lot
at the moment have a studio-type set
up, so you might also see that become
Granny flats typically cost about
$100,000 and are therefore relatively
cheap when you consider their rental
yield. However, adding a granny flat for
$100,000 in your Canberra corner won’t
necessarily mean you’ll add the same
amount of value to your property. Hayes
warns they usually add between $40,000
to $50,000 of value. That’s because it’s
harder for valuers to find comparative
sales, they can turn some buyers off and
banks also view them as a risky asset. API
BIG WIN FOR
Canberra investors can now rent granny flats to anyone.
So how much extra income could they achieve?
æWhat you’ll probably see now is a trend towards two-
bedroom granny flats, rather than single-bedroom
granny flats.Æ Jordan Hayes
ACT \\ THE STATES
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