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The Pros and Cons of Building a Granny Flat

by Andra Hopulele
4 min. read

With house prices and care home fees ever on the rise, many homeowners are finding that multi-generational housing is becoming more and more attractive. If you’re considering moving your elderly parents into your home, you might have heard about granny flats. But, what exactly are they, and what are the pros and cons?

What Is a Granny Flat?

A granny flat is a self-contained living space, typically designed for one or two people, situated on the grounds of an existing property. The name is derived from the increasing trend of elderly relatives moving into their children’s home in order to be closer to the family in their twilight years. However, they can be used for a multitude of other purposes, including long or short-term rentals, a space for grown-up children, or even a guest apartment.

Different Types of Granny Flats

Granny flats go by many other names, including mother-in-law suites/apartments, secondary suites, or casitas. Officially, they’re referred to as an accessory dwelling unit, or ADU, as long as they’re entirely independent of the main home. They typically have their own bedroom, kitchen, bathroom, and living area, and usually a separate entrance. Available in many shapes and sizes, they can be detached or situated within the main home:

  • Converted garage: converting an unused garage is one of the most common and convenient ways of creating a granny flat. If the garage is still in use, it might be possible to add a second storey.
  • Converted basement: a converted basement is another popular choice, and with an outdoor entrance, it’s easy to separate it from the main home.
  • Converted attic: not always the best option for elderly relatives, but ideal for older children or guests.
  • New building: the most costly option is to build a brand-new building, though this can also be the most difficult to obtain permits for.
  • Tiny home: tiny homes are ideal for teenagers or young adult children, though can also work for elderly relatives. Unlike a larger new building, you might not always need permits for them.

The Advantages of Building a Granny Flat

A Multi-Generational Space

Older relatives can feel safer, don’t need to rely on care homes, and can spend more time with their families. Alternatively, older parents may wish to move into a granny flat and give an adult child the main home in which to start their own family. In this way, childcare is often available, while older relatives can be sure they’ll be looked after as years go by. Not only does this keep the family together, but it also saves on child care and care home costs over the years.

Possible to Rent Out

A granny flat doesn’t have to be kept in the family, and many people use them in order to earn additional income on spaces they’re not using. Such units can often be rented out either long or short-term.

A Space for Live-in Employees

Another solution is to create a housing unit for live-in workers, such as nannies. Families who wish to hire a nanny or carer can offer private accommodation that is entirely independent of the main home. At the same time, it’s close enough that, should an emergency arise, help can be on hand within minutes.

Potential to Add Value to Your Home

A granny flat will almost always add value to your home, with many buyers looking out for homes with converted basements in particular. The extra square footage will make your home especially appealing to large families, or those looking for extra income from rentals.

The Disadvantages of Building a Granny Flat

They’re Expensive to Build and Maintain

Building a granny flat isn’t exactly cheap, with costs ranging from around $100,000 to $200,000 on average. In addition to the cost of building, you also need to factor in utility and maintenance costs. Insurance is another cost, and it’s worth checking to see if your policy covers accessory dwelling units. If you’re renting the unit out to tenants, it’s likely you’ll need additional insurance.

Possible Red Tape

City zoning regulations may not allow rental or accessory dwelling units to be built in your area, and changing your zoning can be a long and difficult process, if it’s possible at all. HOAs are another potential issue. Be sure to consult an experienced and licensed general contractor, who can advise on the required permits and paperwork, as well as construction necessities.

May Be Difficult to Sell

While a granny flat will generally add value to your home, they can also make them more difficult to sell. You may lose out on a large portion of the market, while assessors could struggle to put an accurate value on your home, especially if no other homes in your area have them.

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