Additional Income Options for Ageing in Place


Income Options for Ageing in Place 


  • Granny Flats -(Secondary Dwellings)
  • Dual Occupancy
  • Outlining you expectations


Granny Flats – (secondary dwellings)

Under New South Wales legislation, the introduction of The State Environmental Planning Policy (Affordable Rental Housing) 2009 (AHSEPP) provides for the development of secondary dwellings (commonly known as ‘granny flats’).


The addition of a granny flat can be an affordable solution to add value, flexibility, or a source of additional income if you choose to rent it out. If considering downsizing, you may decide to move into the granny flat and rent out the main house.


What is a Granny Flat?

“A granny flat is a self-contained extension of the family home that allows you to convert part of the principal dwelling, structure or garage into a secondary dwelling or can be attached as an extension to your principal dwelling or built as a separate structure and detached from the principal dwelling”.


As a general guide only, the following provides an overview of the minimum controls outlined in the AHSEPP:

  • Only two dwellings: one principal and one secondary allowed;
  • The secondary dwelling (granny flat) cannot be subdivided or made part of a strata or community titled scheme and sold separately to the principal dwelling;
  • It must generally have a minimum site area of 450m²; and
  • A secondary dwelling is to have a maximum floor area of 60m².


If you want to build a secondary dwelling, approval is required. There are two ways to obtain development approval:

  • Complying development: If your application meets the “complying development” provisions in the AHSEPP, your application could be approved in 10 days by a council or accredited certifier.
  • Development application: If your proposal does not meet the above “complying development” provisions, you can lodge a development application with your local council. In this case, assessment is made in accordance with the AHSEPP and any relevant council policies. In this instance, timeframe for approval varies.


If you’re considering altering your home to include a secondary dwelling, we advise you initially view the State Environmental Planning Policy (Affordable Rental Housing) Amendment 2011 and fact sheets on the recent changes from the Department of Planning and Infrastructure’s website here  or speak to a town planning consultant.


Dual Occupancy

Dual occupancy is a form of residential accommodation used as a separate self-contained dwelling. A dual occupancy can be either attached (one large house on a single block that has been divided into two separate homes) or detached (two houses built on one block).


Depending on the size of your land and/or layout of your home, you may consider looking into converting your property to dual occupancy. Dual occupancy development can be permissible development under the zoning of the land under your local council’s Local Environmental Plan (LEP).


Dual occupancy could allow you to rent out (or in some instances, subdivide and sell) one or both of the residences, increases your income and, with the right tenants or co-owners, improves your security, and reduces garden maintenance. Dual occupancies are not limited to the 60m2 applying to secondary dwellings.


What to know whether you can build a dual occupancy?

You can by identifying the property’s zoning by asking your local council. Under the zoning of the land, certain types of land uses are permitted with council consent or prohibited. Approval by your local council is required: there is no sense in going forward if dual occupancy development is not permitted.


If dual occupancy development is permitted, you will need to lodge a development application for council to assess and determine the development proposal in accordance with any relevant state and council planning and development policies.


If your development application is approved, you have options regarding how you can set up ownership, including strata or torrens title. Torrens title is preferred as it is freehold title unlike strata which normally requires a body corporate.


NOTE: Torrens titled or strata titled subdivision may or may not be permitted and is subject to your specific local council planning regulations. This is important to determine if your intention is to sell off the new additional dwelling. 


If you’re considering this option:

  • talk to your local council about whether dual occupancy development is permissible under the zoning of your land;
  • factor in the construction, and associated costs –  the profit may not be as large as first anticipated;
  • assess the upfront costs of remodeling and/or building, together with loss of income from other sources i.e. interest on investments can affect the overall benefits of any additional income derived from converting your property to dual occupancy;
  • research probable increases in utilities, maintenance, and other costs;
  • if developing your property in conjunction with a family member/friend, how will your respective roles and expectations be recorded i.e. will it be stated in a written agreement?;
  • be sure you are clear on what happens if you need to sell the property; and
  • consider privacy issues and, if this dual occupancy includes family members, discuss expectations such as babysitting and other types of support.


Outlining your expectations

When you’re considering sharing property in some way with family or friends, be it in a granny flat or dual occupancy, we cannot stress enough the importance of having a written agreement to outline your respective roles and expectations.


You need to treat this just like any legal agreement to avoid those potentially sticky situations. It is best if all of the questions are put on the table. You may make an agreement now and then all agree to look at it again, for instance, perhaps once a year. Make the yearly review of the agreement something that allows everyone to be frank about their needs, so that any potential problems are caught before they become unsolvable.


If leasing out the additional accommodation to a tenant, you are best advised to place the property management into the hands of a property manager. This third party can deal with any unforeseen problems regarding the lease agreement, and for you to personally avoid tensions and confrontations down the track.   


Some of the questions you should be asking and answering in this agreement, to add to the ones that are relevant from the list about granny flats, include:

  • If developing your property with a family member/friend, how will your ownership be recorded against the title of the property?
  • What happens if one person wants to sell their half or share?
  • How will disputes be handled?



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