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

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.

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.

This matters to you as much as to the tenant.

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.

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.

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.

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

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.

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.

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.

This is the point of doing this early.

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

• 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.