Gone are the days of backyard sheds or garages renovated to become separate living spaces or unofficial Granny Flats.

The humble Granny Flat has now come of age. Experts in the industry are all saying the same thing – more and more people are utilizing a second building on their property as an investment strategy, and often the only way you can make an investment property cash flow positive.

I would say there has definitely been a change in attitude in the last couple of years towards granny flats, certainly here in Logan. We were the one of the first councils in SE Queensland to allow granny flats to be built that are able to be rented out to others than immediate family members.

Here at Logan Granny Flats we have found it’s predominantly investors that are looking at granny flats as a means of improving their cash flow on investment properties. But looking at our statistics, it appears that roughly one in four projects are for the family home being given over to the now grown children with their own families.

The newly built granny flat is for mum and dad who are now looking at downsizing and retirement. In some instances, both mum and dad and the kids have sold their respective family homes; bought a property together with mum and dad then built a granny flat for themselves with the kids having the existing main house.

Gone also are the days of turning the garage into a bedroom / living area with toilet and shower as an illegal/unofficial flat.

We have our own architect, Russell Wombey (Wombey Architects) do all our designs – site specific per property. So we end up with not one granny flat design the same, often with input from the owners themselves.

You see people start to think outside the square about what is actually being designed, how the spaces flow, how they would like to live in the space. And a custom-designed, purpose built granny flat need not be any more expensive than a modular building or conversion of existing space.

At Logan Granny Flats we believe the extra time and energy spent on good design initially, will deliver better returns.

We have seen this within our local area. I have seen transportable auxiliary dwellings or project home builders granny flats, and they don’t achieve anywhere near the rent return on our own architect designed granny flats – for very similar money!

Unfortunately at this point in time, there is little evidence of granny flats built on existing properties that have been on-sold. We have found that on valuation after the granny flat has been completed, it has at least valued $ for $.

Interestingly, what we have found is that people that are renting them out, even 50m2 one bedroom granny flats are getting the same rent or very similar as an equivalent house that is say a 2 bedroom postwar home. That’s a great return on this level of investment.

Most granny flats these days include a full kitchen and living area, and when we build a granny flat, a covered car accommodation with a covered outdoor entertainment area complete with timber floating decks. Probably the main consideration is to ensure that the second building fits in with and is sympathetic to the existing property.

You want to build something that is complementary to what’s already there. Simple things like similar finishes and style of existing buildings. So there are important design factors we believe you need to consider.

Too often we see new project brick homes built in areas that have character housing throughout – they stick out like a pimple on a bum! No thought has been given to the orientation in this instance.

It faces west, not a good idea here in hot, sunny SE Qld! Full height glass windows, a driveway most tenants wont’ use because of the steep incline and no turning circle for the tenants car. What were they thinking? Not a lot, obviously – can you imagine the tenants in the middle of summer? The air conditioning will be working overtime!

This is an example of no real thought about placement of the second building or the problems any prospective tenants are going to have living in the house.

Good design is paramount when building anything, especially if it’s a smaller space. Building in sympathy with the existing area or house style is also a smart move.

One of our main points of difference here at Logan Granny Flats is having an in-house architect! As a result, all our granny flat designs have full passive solar orientation, no wasted hallway spaces to name just a few things.

The latest event in the evolution of the Brisbane market is the strong emergence of the Moreton Bay Region in the far north of the city.
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It has joined Logan City in the far south as the precinct with the most momentum in the Greater Brisbane area. Meanwhile, Ipswich City in the south-west is putting its hand up as well.

Most national commentators misunderstand what’s happening with the Brisbane market. They look at that single figure which apparently describes the whole Brisbane metropolitan area and conclude not much is happening. Australian Property Monitors says Brisbane prices rose 5% last year while CoreLogic RP Data says 4%.

But beneath that one generalised (and highly misleading) figure, there has been lots of activity in precincts which have recorded double-digit annual growth in median house prices.

Markets in the Greater Brisbane area have been on the move for about two years. The inner-city suburbs were busy a couple of years ago and then the middle-ring suburbs on the northside surged. Many of them had annual growth in the 13% to 15% range. The middle-ring suburbs on the southside joined the party 12-18 months ago.

Now it’s the outer-ring areas that are leading. There are still rising suburbs in those northside and southside middle-market precincts, but it’s the cheaper areas on the outskirts that have the greatest activity and momentum.

In this regard, Brisbane is displaying the same pattern we have seen over the past three years in Sydney and Melbourne – the upturn started in the near-city areas and gradually gravitated outwards from the centre. The Ripple Effect is alive and well in residential real estate.

In Brisbane, Logan City (which is the urban bridge between Brisbane and the Gold Coast) has been the market leader in terms of sales volumes for the past 12 months or so. But now it’s counterpart in the north, the Moreton Bay Region local government area (which is the urban bridge between Brisbane and the Sunshine Coast) has mounted a challenge.

Like Logan City, Moreton Bay Region is all about affordability, transport infrastructure and jobs nodes. Many of the suburbs of Moreton Bay Region – including Caboolture (the capital suburb), Morayfield and Deception Bay – have median prices in the $300,000s, while Burpengary and Narangba are in the low $400,000s.

These are high-volume housing markets: Caboolture, Deception Bay, Morayfield and Narangba have each recorded over 340 house sales in the past 12 months. Some have seen median prices rise 6-7% in the past year – but, in terms of price growth, they’re just getting started.

Median rental yields are an attraction for investors, ranging from 5.2% to 5.6% in most of the suburbs of the Moreton Bay Region. 

The LGA includes the Redcliffe Peninsula, which has heightened appeal because the long-awaited Moreton Bay Rail Link will be completed this year.

The overall region has improved amenity through the evolution of the North Lakes master-planned community, which includes major retail (and will soon include an Ikea superstore).
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The region also has good proximity to Brisbane Airport, the Port of Brisbane and the Australia Trade Coast industrial precinct, which means plenty of jobs are handy to the suburbs of Moreton Bay Region.
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Wondering where to invest in 2016? This weeks article below gives good information from onthehouse.com.au.

Note what it says about Logan…

Enjoy !

While the economic outlook for 2016 is weak, there are still locations across Australia that provide good investment opportunities.

With the latest Onthehouse.com.au data, I have identified the top 10 areas to watch in the year ahead, based on strong growth performance, cyclical growth expectations, upcoming developments and historical growth patterns.

While Sydney has been the clear growth winner in recent years, it is in a downswing of its current growth cycle so it is not on the Top 10 list. However, Regional NSW is set to be the winner in 2016, with four regional NSW cities topping the list.

Queensland also has a strong presence on the list, with a total of four metro and regional centres making the Top 10.

Check with the local council or even a Private Certifier to see if a granny flat or studio is permissible on your block.

Check out your local architects or building designers who may be able to assist you. It’s essential that your designer understands and shares your vision

Some issues to consider:

• Siting of the building on the block
• Should the structure be free-standing or attached
• Do you get winter sun and summer breezes
• Is there any indoor/outdoor connection
• Do you have your own private space
• Can you be connected if it needs to be or when it suits
• Do you have your own private access
• Is it a flexible space so as to meet different needs over time

Write a brief. That way your building designer understands exactly what you are trying to achieve. Include any practical ideas you have for the space, but also what the space needs to do and how you want it to feel.

The above are just some ways you can have a personal input into your granny flat or studio.

Make it your own space – reflect Your personality.

We thought we would put together a quick easy to read guide for whats happening Australia wide as part of the Granny Flat Revolution!

Sonia Woolley
11 February 2016

Governed by State Legislation
60m2 Dwelling – 450m2 min. land size
Can be rented out as investments

Governed by State Legislation
Called Ancillary Dwellings
60m2 – 70m2, 2 bedroom – 450m2 min land size
Can be rented out as investments

Governed by State Legislation
(DPU) Dependant Person Units
m2 Currently being done
Cannot be rented out as investments

Governed by each Local City Council (LGA)
Some Councils call them Secondary Dwellings; Auxiliary Dwellings; Granny Flats
Ipswich : 50m2 – no minimum land size
Logan : 70m2, 2 bedroom – land up to 999m2
Logan : 100m2, 2 bedroom – land size over 1,000m2
Ipswich, Logan, Toowoomba – can be rented out as an investment. 
Moreton Bay Shire Council is expected to make a public announcement shortly that they too will allow second dwellings to be built and rented out

Governed by State Legislation
(DPU) Dependant Person Units - 60m2
Cannot be rented out as investment

Governed by ACT State Government
Called Secondary Dwellings
90m2, 2 bedroom
Can be rented out as investments

Governed by State Legislation
The “Ancillary Flat” 30% of main dwelling (or 60m2)

Granny Flats are becoming a world wide phenomena. The evolution of the granny flat into flexible multi- function spaces is explored in more detail here in the article by domain.com.au.

When we have people visit one of our current projects to see the quality of what we build, the first they say in getting out of the car is “This isn’t a Granny Flat – it’s a house”.

I think is well summed up below: In the process, she became one of the newest members of a rapidly growing club – Australians of all ages, circumstances and aspirations collaborating with award-winning architects to create affordable, secondary dwellings with as much care and thoughtfulness as the primary family home.

Approvals for secondary dwellings has increased 20% Australia wide in 2014 – 2015, with nearly 4,000 given the go ahead.

Another great article brought to you by Logan Granny Flats, your local granny flat experts.

Read on and Enjoy!

Trisha Croaker
3 January 2016
domain.com.au

Award-winning architects are creating affordable secondary dwellings with as much care and thoughtfulness as the primary family home, writes Trisha Croaker.

When Shona Veney, a petite, young, single mother of two, approached architect Peter Stutchbury to design her granny flat, she thought “he’d think I was crazy”.

Why, she reasoned, would the internationally renowned Stutchbury – the creator of some of Australia’s most beautiful, award-winning homes and frequent recipient of the nation’s top architecture prizes – want to imagine a simple, “primitive” studio on a landlocked backyard site in a suburban street in Narrabeen?

And, why, with the international opportunities he enjoyed, would he agree to a 60-square-metre project with a budget of under $300,000?

Fortunately, fearlessness was rewarded, Ms Veney’s misgivings proved misguided, and earlier this year she moved across her parents’ backyard into a delightful, Stutchbury-designed, three-bedroom, garden pavilion that’s “changed her life”.

In the process, she became one of the newest members of a rapidly growing club – Australians of all ages, circumstances and aspirations collaborating with award-winning architects to create affordable, secondary dwellings with as much care and thoughtfulness as the primary family home.

New figures released by the ABS in late December confirm demand for secondary dwellings over the past financial year has continued to skyrocket, with approvals jumping a solid 20 per cent in 2014-2015 and around 3,650 flats green-lighted.

A change in legislation in 2009 making granny flat approvals easier to obtain has seen demand for these small-footprint, environmentally sound, flexible buildings increase around 240 per cent over the past six years.

The increase coincides with a boom in construction in NSW generally, with construction valued at $34 billion in the past financial year up from $29 billion a year earlier.

Mr Stutchbury, winner of the architecture profession’s highest honour this year, the 2015 Gold Medal, along with 2010 Gold Medallists Kerry and Lindsay Clare of Clare Design, Brent Dunn and Katharina Hendel of TAKT Studio for Architecture, and Eoghan Lewis, are among a raft of highly respected architects upping the ante.

As Brent Dunn said: “Designing a successful studio, just like any building, is an art.”

This way of thinking marks a long overdue evolution of the humble granny flat, once (and too often still today) treated with little more respect and refinement than a DIY upmarket garden shed – a sweat box in summer, cool room in winter and just plain unappealing to look at.

It’s vital these increasingly popular buildings – now often referred to as studios, pods, retreats, pavilions or flexible multi-function spaces – are designed respectfully and appropriately, Shaun Carter of carterwilliamson architects, and NSW president of the Australian Institute of Architects, said

Powerfully designed studios have become an effective way to provide for the extended family in areas with high land and housing costs, Mr Carter said. An ageing demographic, the return to intergenerational living and the tendency for young adults to live longer at home, the potential for rental income, increased resale appeal and interest in expanding life/work opportunities are influencing the trend.

Ways to enhance intergenerational living were recently explored by Clare Design during the creation of a successful two-storey “box” at the rear of an east coast beach shack. The space was designed to allow an extended family of grandparents, married children and grandchildren to happily and easily live together within two dwellings on a 400-square-metre suburban lot originally intended for one home.

Placing the new home six metres behind the 1950s shack on a long and narrow site, the Clares then connected both buildings by a roofed deck, using battened doors for privacy or openness as required.

“The benefits are environmental, there is a better use of resources, cost effectiveness and better social outcomes from increased density and mutual family support,” Kerry Clare said.

The benefits of a thoughtful, well-designed studio or “shedio” as his clients refer to it, even on the tightest or grittiest of inner-city sites, can be far-reaching, Mr Lewis of Eoghan Lewis Architects said.

“In a recent project at Tempe, the studio bookended the backyard, and ticked many other boxes. It screened an unsightly neighbour, separated work from play, created outdoor storage as well as being a dedicated place to work and be creative.

“It’s great for parties, sets up another activity in the backyard and is a beautiful object to look at from the house.”

A thoughtful studio near Wollongong, known as The Pod, and the Copper House in Coogee, winner of the 2015 Small Project Architecture Award – both by TAKT Studio for Architecture – have proven equally flexible.

“Built as an intergenerational collaboration to provide accommodation for the annual visit from grandparents from Europe, the Pod effectively turns into an extension of the original house in the off season, providing the yoga room, teenager retreat and living area,” Mr Dunn said.

“We have seen an ever increasing demand for innovative secondary dwellings / backyard studios,” the architects said. They said the secondary dwelling SEPP [State Environmental Planning Policy (Affordable Rental Housing) 2009] offers a relatively straightforward approval process for buildings up to 60m2 on many sites.

“We find that initially most clients consider them valuable in terms of rental income, but often discover that they become the ideal space to start long dreamed of artistic endeavours, provide much wanted gathering space or support new living for the extended family.”

Back in Narrabeen, Ms Veney was a single mum, happily returning to live at home with her parents, while wanting to provide the best environment for her children . As they approached adolescence, she recognised their need for not just shared but separate places to retreat to. With a budget of less than $300,000, a granny flat was the most viable option.

But with deeply individual, personal needs, tastes and aspirations, it was important this space not just be a generic, cookie-cutter, garden shed – it should reflect the family, their life’s journey and hopes for the road ahead.

“Everyone told me not to waste fees on an architect. But I didn’t listen.

“I wasn’t worldly about everything to do with architecture, but I knew I couldn’t and shouldn’t design this by myself. I know it sounds wanky to say it’s changed my life, but it has. It’s so powerful.”

Have you ever wondered if you can build a granny flat in your own backyard, or your investment property?

You could check with your local council. Ask Ipswich City Council about their Granny Flat Regulations, or even a private certifier to see if it’s possible.

Or you could call us

Logan Granny Flats

We Can Work it Out for You!

Just give us a call

Sonia - 0403 309 136

This week, Logan Granny Flats brings to you an interesting article bringing to attention some things that not everyone might be aware of!

Read on & Enjoy…

Duncan Hughes
Australian Financial Review
28 January 2016

Granny flats are springing up across the nation's suburbs as property owners convert their backyards for more living space, additional income and generous tax deductions, say financial and construction specialists.

But a threefold increase in granny and "Fonzie" flats in the past five years also creates the possibility of backyard eyesores and sales of the family home, which are usually tax-free, attracting capital gains tax, they warn.

"Those thinking that a granny flat will increase the value of their home should think again," says Paul Nugent, a director of buyers' advocacy Wakelin Property Advisory. "Any additional value is likely to be negligible.

"Most people would prefer to have their backyard left alone and many granny flats end up as storage rooms for old exercise bicycles and rowing machines."

Other commentators believe granny flats are here to stay as working couples enlist the support of their parents to help raise their children, middle-aged parents create an autonomous space for teenagers, and empty nesters use them for rental income.

"A well-constructed and attractive granny flat can definitely add value to the overall property," says Tony Velardi, a builder who specialises in granny-flat construction. "In addition to providing extra space, it creates rental-income options."

Granny flats cannot be put on a separate ownership title, which means the cost is added to the price of the property. It also means they cannot be sold separately.

Nearly 100 granny flats were being completed each week in Sydney alone, a threefold growth in five years, according to state government statistics.

NSW, which has the highest overall demand for rental accommodation, allows granny flats to be rented. Information about eligibility and restrictions is available online from its planning and environment department.

NSW also allows Fonzie flats to be built over garages in new developments, subject to council approval.

Fonzie flats are named after Arthur "Fonzie" Fonzarelli a character from the American sitcom Happy Days, who lived in a loft.

They can be sold separately to the primary residence.

Granny flats may be rented out in Western Australia, the Northern Territory, Tasmania and ACT, but cannot be offered as rental apartments in Queensland, Victoria and South Australia.

Requirements for planning permits and approvals also vary between states.

Velardi says a three-bedroom, self-contained apartment will cost about $150,000 and take between three and four months to complete.

Engineers might need to be consulted before building a Fonzie flat to assess the strength of existing beams and posts.

There are cheaper alternatives, such as DIY flat-pack construction kits that can be bought online for less than $10,000 and are delivered in about eight weeks.

Pre-built granny flats from kit home builders usually start about $69,000 for 60 square metres.
This will give you "the most bang for your buck" says Dino Talic, vice-president of hipages.com.au, a website for hiring home improvement professions.

Velardi says you "get what you pay for. Home owners shopping for a granny flat need to ask: "How sturdy are they? Will they pass the test of time."

They also need to consider the access needed to deliver materials. "Will they be easily delivered and constructed in a conventional backyard, or will a crane be needed to lift them over existing buildings?" he asks.

A granny flat costing around $120,000 to build typically generates an annual rental yield of about 15 per cent, assuming the owner can find a tenant willing to pay the going market rate, says BMT Tax Depreciation, a quantity surveyor that specialises in depreciation schedules for residential and commercial investors. This many not be possible in former mineral boom towns like Perth and Darwin, it warns.

Average depreciation deductions for a granny flat are about $5300 in the first year, rising to a total of more than $23,700 over five years, according to BMT.

Shared areas between the granny flat and owner-occupied property, such as patios, pools and barbecues, can also be deducted depending upon usage, BMT says.

Retirees considering renting out granny flats should check with Centrelink about the impact of rental income on their benefits.

For example, if the flat is being rented to a grandmother or another relative for a nominal amount, it would not be regarded as a commercial transaction and neither the income nor the expenses would be taxable or tax-deductible, says Mark Chapman, director of tax communications for H&R Block.

It becomes more complicated if the flat is rented to third parties, or taxable commercial rents are charged, he says.

"Any expenses incurred on running the flat – such as a proportion of utility bills and land rates or borrowing rates arising from the construction of the flat – will be tax deductible. Depending on the precise circumstances, this might generate a taxable profit or it might generate a loss for the taxpayer to claim against other income," he says.

There's also a possible risk of incurring capital gains tax on the main residence, which is normally exempt.

Say a house is bought for $300,000 in 2005 and sold 10 years later for twice the price. In 2010, the owners build a granny flat occupying one-sixth of the total area of the property and rent it to a third party.

"This means one-sixth of the gain arising from 2010 to 2015 ($150,000/6=$25,000) will be liable for capital gains tax," Chapman says.

This example is illustrative and, to avoid too much complexity, excludes deducting the construction costs of the flat.

"The gains would be based on how much space the granny flat takes up," says Chapman. "You would also need to consider how long the flat has been in existence.  If you have owned the property for 10 years but the flat was built only five years ago, you don't need to worry about CGT on the first five years.

"If granny really does live in the flat and you can demonstrate that the space is an integrated part of the household lifestyle, you may be able to argue that the main residence exemption should cover the granny flat too."

Options for financing a granny or Fonzie flat range from using an equity release from the main residence, refinancing with a different lender or a construction loan, according to Mortgage Choice spokesperson Jessica Darnbrough.

There are dozens of loan packages available, so it could be useful to seek advice from a broker about the best strategy, lowest rates and easiest terms, she says.

For example, a  $90,000, 20-year reverse mortgage loan at 6.6 per cent is likely to cost about $344,000, according to Canstar, a company that provides financial information. This assumes a 15 per cent loan-to-value ratio, upfront fees of about $1000, annualised charges of $112 and a $300 discharge fee.

According to Canstar's review of the sector, there is a 30-basis point difference between the lowest rate of 6.45 per cent and highest at 6.75 per cent.

Rising property prices, rental increases, an ageing community and attempts to limit urban sprawl are contributing to the rise in the popularity of granny flats, particularly in Melbourne and Sydney, according to property specialists.

But there are also deeper social issues in the mix of causes, says Anne Hollonds, a psychologist and director of the Australian Institute of Family Studies, a government body that researches family well-being and welfare issues.

Hollonds says having grandparents, parents and children in the same household, or newlyweds remaining in the family home until they saved a deposit, was a tradition until recent generations, particularly in the inner suburbs.

The growing trend for both parents to work increases the financial and social value of having grandparents nearby to look after children, particularly after school before parents get back from work.

"For many, it is important not to live in the same house but nearby," she says.

Granny flats can provide the older generation, particularly those who do not mind less space, with a degree of independence, autonomy and distance.

"Close enough to be together but enough room to be apart," is how she describes the adult relationship Generation X and Y (born after 1961) are renegotiating with their parents.

Unfortunately the information about Qld not being able to rent out second dwellings is not strictly true. Queensland is governed by local councils in terms of planning schemes – there are only a handful of local councils at this point in time that allow them to be built. And Ipswich and Logan are two of the councils that have moved with the times and joined the Granny Flat Revolution!