Backyards around Australia are being transformed. In a fight against urban sprawl and an answer to the housing shortage, overgrown blocks and unused gardens are being turned into a new style of living quarters, thanks to the resurgence of the humble ‘granny flat’.
The small backyard unit, once popular for housing older relatives, has grown in popularity in recent years. Due to an increasingly competitive rental market and skyrocketing rents, more tenants are searching for alternative housing options. And with the high cost of living making it harder to pay the mortgage, the granny flat offers a win-win solution; affordable housing for tenants and a second income for landowners.
For renters: the benefits of choosing a granny flat
For renters fed up with paying exorbitant rents for tiny apartment with nary a balcony, a granny flat is a fantastic alternative; it’s cheaper than renting a house but has a homier feel than a high-rise. In fact, many granny flats will offer private entrances and separate driveways, so you don’t even feel like you’re in someone’s backyard. Not to mention the modern day granny flat has had a makeover; sleek new designs and contemporary interiors make granny flat living a pretty swanky experience.
For homeowners: investing & renting
For home owners looking to invest, the return on your granny flat will largely depend on your location and ability to attract tenants. But if you live in a high demand area close to schools, shops and transport, there’s a chance you could get a better return from your granny flat than from other investment properties.
But make sure you do your homework – there are lots of things to consider before forking out your cash. Only some states allow owners to rent out their granny flats, while in others, they’re strictly for un-paying relatives. And you’ll need to check with your local council for any building restrictions before you start work. You may also want to consider the pros and cons of building from scratch opposed to installing a pre-built portable home.
Choosing a tenant
Once you’re all set up and ready to lease your granny flat, don’t forget to advertise (for free) on Gumtree to find your perfect tenant. Here are a few tips to help you find the right person:
• Meet: Always meet potential tenants face to face. This is going to be the best way for you to gauge whether they’re the right fit for you
• Rules: It’s not often you get to choose your neighbours, so take the chance to put down some ground rules. Make it clear up front if you won’t allow smoking or late night noise – this will help you find a compatible tenant
• References: Make sure you get references from previous landlords. Or if it’s a student’s first time living out of home, it could be worth asking their parents to be guarantor
• Get everything in writing: Make sure you cross your ‘t’s and dot the ‘i’s by having everything in writing; the lease agreement, the bond and the condition report. Also, even though you’re living in close proximity, follow up any conversations with your tenants via email so you have a record in case you need it
• Know your rights: As a landlord you have rights, but you also have responsibilities. Every state’s tenancy laws are different so get up to speed and know your rights before embarking on any tenancy agreement
A granny flat may not be the ideal home choice for everyone, but for renters wanting that home-like experience for a fraction of the cost it’s definitely an option worth considering. And for homeowners looking for an investment opportunity, building a granny flat and leasing it out may help you pay off your mortgage sooner than expected!