Article Category - Property and Conveyancing By Aaron Strickland, Lauren O'Brien 23 May 2019

You may be considering a second dwelling on your property, to rent out for investment purposes or to cater for a family member. 

The State Government considers the “second dwelling option” a vital component of a diverse and affordable housing market – so much so that in 2009 it amended State Environmental Policy to allow granny flats to be approved as complying development.

What is complying development?

Certain developments (in our case a granny flat), can be approved via a fast-tracked process, without the need to apply for development approval.  The development can be assessed as complying by council or an accredited certifier.  Examples of criteria which must be met for a granny flat to be considered ‘complying development’ are:

  1. Minimum land area of 450m2;
  2. Minimum 12 metre frontage; and
  3. Built on the same lot and in conjunction with the principal dwelling. 

There are other criteria which must be met and we recommend you speak with your planner, council or lawyer to work through and ensure your planned granny flat is, in fact, complying.

It is becoming more common for family members who will live in the granny flat to contribute financially towards the construction.  It can be a great idea and it definitely helps when resources are pooled.  Unfortunately, we have also seen an increase in family disputes and litigation surrounding these arrangements.

Often, these disputes and uncertainties can be avoided by simply documenting the agreed terms.  Are the funds a gift?  Are the funds repayable on sale of the property?  What is to happen if the property is sold (by choice, divorce, or other life circumstance)?  Is ‘granny’ to contribute to council rates?  What is to happen when the family member passes away? 

Our Property Law team can assist with any questions you have about complying development and documenting family arrangements.  To make an appointment, you can contact us in Bathurst, Oberon or Lithgow on 1800 650 656.  We’re here to help.

Note:  We suggest you speak with your accountant if considering a granny flat for investment purposes, or if ‘granny’ is to pay rent, as it may affect your taxable income, exemption from capital gains tax or your GST obligations.

Aaron Strickland and Lauren O’Brien | Business Law and Property Team