“Granny Flats” have grown dramatically in popularity over the past couple of years. With high house prices and rent keeping teenagers and adult kids at home for longer, parents are looking at different ways to help them achieve some level of independence while saving for a home loan.
They also appeal a great deal to those who own investment properties, as granny flats are relatively cheap to construct and can increase the rental yield to nearly 10 percent (to be confirmed Gordon). This extra income from rent can also help out those wanting help to pay off their mortgage, as the weekly rent obtained from these dwellings may be enough in some cases, to cover the repayments.
Some have even gone as far as saying that granny flats will solve the housing shortage problem in already crowded metropolitan and suburban areas.
What they’re good for
Granny flats could be said to ‘grow with you’ as they have myriad uses. Some of these include:
Save money on renting an expensive commercial space by building your own office right at home. You will also save on travel costs to and from work and eating out, spend less time travelling places and get a better life/work balance.
Housing elderly parents
You don’t want to put them in a home, but they need to be looked after without losing their independence. A granny flat is a great residence for elderly parents.
Lodging for young married couples
Young couples trying to save for their own home need somewhere cheap to rent in the meantime; parents sometimes build them a granny flat out the back to provide a solution to their problem.
Rent out the granny flat to make some extra money, or even downsize and move into the granny flat yourself and rent out the house to make even more. As an investment, a granny flat is neutrally or positively geared even before any tax benefits.
Is sewing, art, crafts or woodwork one of your hobbies? A granny flat is a perfect space to carry out these passions without interfering with any house space.
Adding more bedrooms
Add another bedroom or two for less cost than renovating the house. This then creates a separate space for your adult or teenage kids. You could then rent the space out once they grow up and move out.
Financing granny flats
When it comes to financing your new granny flat, you should speak with your lender (insert your finance man’s details). Generally, you can use the current equity available on the property, which will merely add an amount onto your current mortgage. Obviously you will need to have the existing property valued.