We build in Sydney, South Coast (Wollongong) & Central Coast NSW
We build in Sydney, South Coast (Wollongong) & Central Coast NSW
We build in Sydney, South Coast (Wollongong) & Central Coast NSW
We build in Sydney, South Coast (Wollongong) & Central Coast NSW
We build in Sydney, South Coast (Wollongong) & Central Coast NSW

Renting out your granny flat: what landlords need to get right

Last reviewed: August 2026
By BlueGum Granny Flats
Builder Licence 247388C
HIA member
HIA GreenSmart
In-house approvals, not outsourced
NSW Fair Trading

A granny flat that rents easily and one that sits empty are usually the same building with different decisions made around it. Privacy, separate access, parking and metering matter more to a tenant than the finish of the benchtop, and all 4 are decided at design stage when they are cheap to get right.

Here is what to sort out before the slab goes down.

The 4 things tenants actually care about

1. Separate access

A tenant wants to come and go without walking past your kitchen window or through your living space.

The best arrangement is a separate gate and path from the street directly to the granny flat’s front door. Where the block does not allow that, a clearly defined path along the side of the house with its own gate is the next best thing.

Shared access through your main entry or through your private yard is the single biggest thing that reduces rental appeal.

2. Privacy in both directions

This matters to you as much as to the tenant.

Design decision
Effect
Windows facing each other between dwellings
Poor privacy for both
Granny flat living area facing your bedroom
Noise complaints in both directions
Screening, fencing or planting between dwellings
Meaningfully improves both
Separate private outdoor space for the tenant
Strong appeal, reduces conflict
Orienting the granny flat away from the main house
The cheapest fix, decided on paper
Effect
Poor privacy for both
Effect
Noise complaints in both directions
Effect
Meaningfully improves both
Effect
Strong appeal, reduces conflict
Effect
The cheapest fix, decided on paper

The SEPP already requires privacy screens in some situations, based on how high the floor level sits and how close the window is to a boundary. Meeting the minimum is not the same as designing for privacy.

3. Parking

If your suburb has tight street parking, a tenant with nowhere to park will keep looking.

Work out early whether both dwellings retain usable parking, and whether the tenant’s space is accessible without moving your car. Parking requirements on your land are set by the planning controls that apply, and the Housing SEPP treats the number of spaces on the site as a non-discretionary standard, so confirm the position for your block with your certifier.

4. Outdoor space

Even a small courtyard or paved area that belongs to the tenant makes a real difference, particularly for longer tenancies. A granny flat with no outdoor space of its own reads as temporary.

The practical setup decisions

Metering

How utilities are metered decides who pays for what and how much friction there is.

Approach
How it works
Consideration
Separate meters
Tenant has their own account
Cleanest, costs more to install
Sub-metering
You meter their usage and on-charge
Rules apply to what you can recover
Included in rent
You pay, rent reflects it
Simplest, but usage is not your control
How it works
Tenant has their own account
Consideration
Cleanest, costs more to install
How it works
You meter their usage and on-charge
Consideration
Rules apply to what you can recover
How it works
You pay, rent reflects it
Consideration
Simplest, but usage is not your control

Decide before construction. Retrofitting separate metering is far more expensive than installing it during the build.

What you can lawfully recover from a tenant for water and other utilities is governed by residential tenancy law, so check the current position with NSW Fair Trading or your property manager before setting the arrangement.

Storage

Small dwellings live or die on storage. A tenant with nowhere for a vacuum cleaner, a suitcase and a bike will feel cramped in a well-designed 60 m². Built-in wardrobes, a linen cupboard and some external storage are worth more to rentability than an upgraded splashback.

The things a rental legally needs

Beyond the building approval itself, a rented dwelling has obligations. These include smoke alarm requirements, and the minimum standards a residential premises must meet to be lawfully rented in NSW.

These are set by residential tenancy legislation and they change from time to time, so confirm the current requirements with NSW Fair Trading or a licensed property manager rather than relying on a general article.

Design decisions that cost nothing at plan stage

This is the point of doing this early.

Decision
Cost if decided on paper
Cost if changed later
Which way the front door faces
Nothing
Significant
Where windows sit relative to the main house
Nothing
Significant
Separate gate and path
Small
Moderate
Rough-in for separate metering
Small
Large
Built-in storage
Small
Moderate
Private outdoor area
Small
Moderate
Cost if decided on paper
Nothing
Cost if changed later
Significant
Cost if decided on paper
Nothing
Cost if changed later
Significant
Cost if decided on paper
Small
Cost if changed later
Moderate
Cost if decided on paper
Small
Cost if changed later
Large
Cost if decided on paper
Small
Cost if changed later
Moderate
Cost if decided on paper
Small
Cost if changed later
Moderate

Every one of these is free to change while it is a drawing.

Before you advertise

  • Confirm you have your occupation certificate. An unapproved dwelling should not be rented.
  • Talk to a local property manager about realistic rent and current vacancy in your suburb.
  • Arrange landlord insurance, which is separate from your home insurance.
  • Decide whether you are managing it yourself or using an agent.
  • Understand your obligations as a landlord under NSW residential tenancy law.
  • Have a written tenancy agreement, even if the tenant is someone you know.

That last one matters more than people expect, including with family. A written agreement protects both parties and removes the ambiguity that causes problems later.

Share with

Frequently asked
questions

Yes. A secondary dwelling can be rented to any tenant, including people unrelated to your household. What you cannot do is subdivide it and sell it separately.

Not necessarily, but it is much cleaner if the tenant has their own account, and it removes arguments about usage. Decide before construction, because installing it during the build is far cheaper than retrofitting.

There are rules about what a landlord can recover and under what conditions. Check the current requirements with NSW Fair Trading or your property manager before setting it up.

Your home and contents policy generally does not cover the risks that come with renting. Landlord insurance is a separate product and worth discussing with your insurer before a tenant moves in.

That depends on how much involvement you want and how close you live to the tenant. Managing a tenancy in your own backyard has an obvious convenience and an obvious awkwardness. A property manager creates a buffer, which some landlords value highly when the tenant is 10 metres from their back door.

Design it to rent from the start

The decisions that make a granny flat easy to rent are made on the plans, not after the build. Access, privacy, parking and metering are all free to change while it is still a drawing.

Browse the floor plans, or call BlueGum on 1300 060 651 to talk through a layout that works for a tenant and for you.

Building granny flats since

Since 2012

Builder licence

247388C, verifiable through NSW Fair Trading

Industry body

Housing Industry Association member

MBA NSW Excellence in Housing Awards

Winner 2021, Winner 2023, Finalist 2020

Completed granny flats documented on this site

70+

Approvals

CDC and DA, both managed in-house

Pricing

Fixed price after a site assessment, 2-bedroom from $134,990

Building granny flats since

Since 2012

Builder licence

247388C, verifiable through NSW Fair Trading

Industry body

Housing Industry Association member

MBA NSW Excellence in Housing Awards

Winner 2021, Winner 2023, Finalist 2020

Completed granny flats documented on this site

70+

Approvals

CDC and DA, both managed in-house

Pricing

Fixed price after a site assessment, 2-bedroom from $134,990

BlueGum Granny Flats is a licensed NSW builder, licence number 247388C, and a member of the Housing Industry Association. Setback, frontage and landscaping figures are drawn from the State Environmental Planning Policy (Housing) 2021 as in force in August 2026 and are general information, not planning advice. Other planning instruments applying to your land can vary them. Confirm the requirements for your block with a certifier or your council. Cost ranges are drawn from published 2026 Sydney market guides and are not a quote.
Check my block Call 1300 060 651