Meg Barrett,
Investment Property Consultant at Image Property.
Granny flats no longer just for your granny
In a move that is expected to house thousands of Queenslanders, the State Government recently announced that it would make emergency planning changes to encourage homeowners to rent out secondary dwellings – or granny flats – for the next three years.
Deputy Premier and Minister for Planning Steven Miles said the changes, suggested by stakeholders at the Queensland Housing Roundtable in September, will remove restrictions on people who can live in secondary dwellings.
“Many homeowners have granny flats that they’ve built or converted for family members or teenagers who have since moved out,” Mr Miles said.
“Right now, most homeowners can’t rent secondary dwellings, such as granny flats, to anyone other than their immediate family.
“At the same time some Queenslanders are sleeping in their cars or in tents.
“It just makes sense to allow existing accommodation to be occupied by someone other than a relative to provide more affordable accommodation for Queenslanders.
“It also allows homeowners to earn rent, helping them meet the increased cost of living.
“We can move people in to underutilized granny flats much more quickly than constructing new properties.”
While the REIQ welcomed the announcement, it said that homeowners needed to consider the tax implications of renting out a granny flat to earn income.
According to the REIQ, it will be vital that homeowners do their research to understand the potential tax implications that it could create, in terms of capital gains tax at the time of the sale, as well as potentially triggering land tax liabilities under recent land tax reforms.
“We’re still seeking clarification around how the new land tax regime will impact granny flats and the availability of the Principal Place of Residence exemption,” REIQ CEO Antonia Mercorella said.
“We encourage the Queensland Government to provide clear education around tax implications for those who are interested in renting their secondary dwelling.
“Equally, it’s important prospective tenants considering renting a granny flat are educated around what their rights are, and particularly, the need for written agreements. For that reason, the REIQ would like to see the state government provide a suggested template agreement for this purpose.”
Ms Mercorella also said that while it was great to have innovative solutions being brought forward to address the current rental undersupply across the state, community education was important for consumer protection.
“We appreciate that sometimes red tape gets in the way of creative solutions, but equally, we don’t want to see a “free for all” where there’s no regulation, leaving people vulnerable to being exploited,” she said.
“For example, we don’t want people to think they can suddenly use inappropriate structures such as garden sheds or garages and pass these off as granny flats.
“This change only applies to granny flats that previously could only be rented to immediate family, and removes this restriction – development approvals will still need to be sought from local governments for newly constructed granny flats.”
Brisbane City Council’s 2014 City Plan refers to an extension to an existing dwelling house in a residential zone for a granny flat as a “secondary dwelling”.
It can be a maximum of 80 square metres in size. The granny flat must meet the accepted development, subject to requirements criteria in the Dwelling house code or Dwelling house (small lot) code.
Small lots are less than 450 square metres, or for a rear lot less than 600 square metres, excluding the access way.
You will need to lodge a development application if:
- the granny flat is bigger than 80 square metres in size
- it is more than 20 metres from the main house.
You will need a development application for dual occupancy if you are renting it to someone who does not form part of your household.
At the time of writing, the emergency planning changes about granny flats had not yet been implemented by the State Government.
