Granny Flats Perth – The key to successful property investment?

With changes to state legislation allowing granny flats to be built on residential land and rented to anybody, it’s no wonder they’ve become increasingly popular. Previously a granny flat could only be occupied by a direct family member, intending a granny flat to be exactly as the name suggests – an ancillary dwelling so an older member of the family could remain living with their younger family. Now granny flats in Perth are being constructed as a cheaper and quicker alternative to subdividing a block, or a way to create better cash-flow. Below we take a look at some of the reasons granny flats have become so popular in Perth, and what needs to be considered before incorporating a granny flat into your investment strategy. 

Ways in which constructing a granny flat on your property could benefit you include:

• The demand for smaller, more manageable properties is becoming bigger within many parts of Perth.
  
• High rental yields can be achieved through leasing a granny flat.
  
• State government are encouraging the construction of granny flats in Perth, so approvals are often being granted faster. 

• BMT have stated that the average first year depreciation deduction for a granny flat is $5,288, which often increases to more than $23,700 in deductions over a five year period. 
  
• Carers for the disabled or elderly can now live on site in a granny flat.
  
• A granny flat can give teenagers or grown up children who still live at home privacy within a comfortable environment many families previously achieved this by converting a shed or something similar.
  
• A granny flat in Perth can be constructed on a block as little as 450sqm in some circumstances (dependent upon local council’s regulations). 
  

With the average cost of building a granny flat in Perth ranging from as little as $35,000 for an addition to an existing house, to $170,000 for a three bedroom granny flat, it’s beginning to sound like an affordable and beneficial investment option right? Well there are still some important things to consider before building a granny flat in Perth:

• Do your research – there may be demand for granny flats in areas where there is an undersupply of smaller properties. Families in areas with 4-5 bedroom homes may value extra yard space as opposed to an ancillary dwelling. Ensure you enquire as to whether any developments for apartment buildings or strata units have been approved in the area. 
  
• Perth’s rental market is currently over-supplied and thus it may be difficult to obtain tenants in today’s market. 
  
• Granny flats cannot be placed on a separate title meaning they cannot be sold separately and the cost will be added to the price of the property. 
  
• Leasing a private granny flat means you’ll lose your tax-free status for capital gains on that part of the property. 
  
• If the main dwelling is already rented out you will need to re-negotiate with current tenants and may risk losing them if they feel uncomfortable with “sharing” the property with a leased granny flat. 

As more granny flats Perth are constructed, more infrastructure is needed to support the Perth economy. In Sydney “fonzie flats” are becoming increasingly popular. A fonzie flat is a studio with bathroom that can be used as an office, retreat, teenager’s pad, guest area or rented out. Peter Phibbs, a professor of urban planning at the University of Sydney, expects the introduction of fonzie flats on the East Coast and the smaller cost to tax payers for infrastructure to encourage the state government in WA to liberalise granny flats and promote fonzie flats as an alternative in the future. 

With many options available to property investors in Perth, and a huge attempt by the state government to stop urban sprawl, granny flats Perth may be a viable investment option for you. 
This blog was written by the team at Cap-It-All Building Inspections Perth.