Caption: Granny flats are becoming more popular in Western Australia, especially in Perth.
Changes to the regulations covering granny flats in Western Australia now let homeowners to rent them out to tenants other than family members. The move aims to ease the rental housing crush in the resource-rich state, making it easier for homeowners to earn more money from tenants.
The new rules mean that granny flats can be built in all residential zones as long as there’s no more than one main home and one granny flat on the same block. Also, it’s stated that the size of such buildings shouldn’t be more than 70 square metres—the maximum allowed by the local councils.
It’s reported that many residents in Perth have been anticipating the rules change, already cleaning up granny flats that have been used as storage sheds or have lain dormant on their properties.
Planning Minister John Day said the allowable floor space for granny flats would be increased to provide flexibility for families in investing in and renting out granny flats to seniors and students as an affordable and safe option.
“At the moment, granny-flats must be used by family members or the home owner themselves. By scrapping this old restriction, so called empty nesters and seniors can unlock equity in their homes and receive a regular income, or provide space for a carer to live close by in their aging years,” Day said.
“There is also potential for students and young people looking for affordable accommodation to rent granny-flats.
“Normal planning requirements around setbacks and density will continue to apply, but this change will introduce more flexibility and introduce more rental accommodation to the real estate market.”
There are many benefits of building a granny flat. For one, it’s a decent size one-bedroom, one bathroom flat with a parking space that would only cost less to build and can be rented out for around $250 or more a week in most suburbs in Perth.
Granny flats can be built for as little as $70,000, but the cost can rise depending on their size and how many rooms are in them. An $80,000 granny flat rented out for $250 per week is a 16 per cent yield.
According to Damian Collins from Momentum Wealth, a potential blended yield combining the original dwelling with the granny flat yields of around 8 per cent are available.
A local company that specialises in granny flats also reported that their sales have risen by 1,000 per cent in 5 years of being in business, from building 1 granny flat every month in 2008 to building as many as 10 every month in 2013.
Efforts by WA to Further Develop Its Housing Sector
The state government has decided to redevelop big blocks owned by the Department of Housing to build 500 affordable homes within 3 years.
Mr Day said the department has more than 200 blocks of more than 1,000 square metres that are currently vacant or with just 1 dwelling unit.
He stated, “We will redevelop these large blocks to provide two to three new homes per block, all for sale to Western Australian families.”
Under a state government shared equity programme, about 50 per cent of these new properties will be available for families, couples and individuals to buy, making property ownership possible for buyers who might not qualify for normal housing loans.
One of the changes to the residential design codes is lowering the minimum average lot size for single residential R20 developments from 500 square metres to 450 square metres in line with previous regulations before a change in 2002. Mr Day said this would give more homeowners opportunities to sub-divide their blocks.
He added that the minimum lot size that requires planning approval for most single homes will also drop from 350 square metres to 260 square metres in a bid to reduce red tape.
However, building licences will still be required regardless of the size of the lots.