How to make a Granny Flat work for your family

26-06-2023    |    Resource

The humble granny flat is growing in popularity!  There appears to be a growing need for granny flats as more ageing parents are considering moving in with their adult children, either as a cost-effective alternative to buying a house or as a way of ensuring that they can be close to the children for health or welfare reasons.  In some cases, particularly in the expensive Sydney housing market, parents and their children are even pooling their money to buy a home on a large block and then building a granny flat for the parents in the back yard.

It seems like a great solution for both parties - but is there anything you should consider before rushing into a granny flat arrangement?

Make sure everything is clear

Whenever you decide to build or rent out a granny flat, particularly to other family members, it is very important that you agree on all of the necessary arrangements before you proceed.  Unfortunately issues and disputes can arise, and even with the best intentions, the arrangement might not be perfect in the longer term.

The sort of things you will need to sit down and work out together include:

  • how will costs like electricity, water and rates be divided?
  • if rent is payable, how much will it be?
  • who will pay for the construction of the new granny flat or any renovations if required?
  • is the land and property suitable for the purpose of a granny flat - is there enough space?
  • what access will the residents of the granny flat have to the main dwelling?
  • how will you address any disagreements or disputes over costs in the future?
  • what will happen if things don't work out?
  • what will happen if either the parents, or the children in the main house, want to move?
  • what happens if the parents (or whoever lives in the granny flat) pass away?

Understandably, there are a lot of things to consider and investigate.  In addition to the above questions, the parents should also think about issues such as whether the move will impact on their aged care pension, or what it means for any other children in terms of their estate when they pass away.

Speak to a lawyer

At Lamrocks, whenever we hear about families entering into arrangements like this, we usually recommend that both parties (ie. the family member living in the main house, and the one in the granny flat) speak to their own lawyer about it.

Having separate legal advice and representation will ensure that both of your interests are looked after and any future issues or potential disputes can be identified and addressed in advance.

We also recommend clearly documenting the arrangement so that it is in writing and understood by everyone involved.  This is particularly important when money or financial contributions are involved and it will act as a safeguard for both parties.

If you are considering a granny flat arrangement, call Lamrocks for advice on how best to proceed.  A little bit of time spent finalising the arrangements now, could make all the difference in the future!


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