Guide to granny flats for homeowners in Victoria

Things you need to know about granny flat rules in Victoria

What is a granny flat?

In Australia, the term 'granny flat' is often used to describe a small secondary home on a property. In the past, Victoria had some of the toughest regulations in the country, with many councils stipulating that the occupant of a granny flat had to be dependant, and that the building had to be removed when they died or moved out. 

However, on 14 December 2023, Amendment VC253 made changes to Victoria's planning provisions and planning schemes, and the Building Amendment (Small Second Dwellings) Regulations 2023 made changes to the Building Regulations 2018, which paved the way for a coordinated approval processes to make it easier for Victorian homeowners to build a small second dwelling on their proprty.

The old type of moveable granny flats, officially called Dependent Person's Units (DPU), will be phased out by 28 March 2025. If you want to turn an existing DPU into a small second dwelling, speak with your local council or a registered building surveyor.

Who can live in a granny flat?

According to Planning Victoria, anyone can live in or rent-out a small second home, including a family member, dependent person or unrelated persons. Check your local council's requirements for the most up-to-date information.

It's also important to note that the residential tenancy requirements that apply to a dwelling also apply to a small second dwelling, including room sizes, facilities and smoke alarms. Minimum rental standards also apply. More information is available from Consumer Affairs Victoria.

What are the granny flat regulations in Victoria?

The Victoria Planning Provisions and all planning schemes now include the land use term ‘small second dwelling’ rather than granny flat. The definition of a small second dwelling is included in Part 5 of the Building Regulations 2018. The Department of Transport and Planning outlines the recent changes to the planning and building systems here.

In summary, a building permit is always required for a small second dwelling, but a planning permit is only required in some circumstances. A planning permit is usually not required in a residential zone if the lot is 300m² or more. For details and information about overlays, check with your local council.

These are the other things that define a small second dwelling:

• The floor area must be 60m² or less.
• The second dwelling must be on the same lot as an existing home.
• It must be the only small second home on the lot.
• It must not be subdivided from the main home.
• It must have a kitchen, bathroom and toilet.
• It cannot be connected to a reticulated natural gas supply.

Check your local council’s guidelines for any further restrictions on granny flat size, privacy requirements, garden areas, fencing and other guidelines.

How do I build a granny flat or small second home?

The first step is to check your local council's requirements and seek advice from a building professional. Laws and approval processes vary between local councils, so make sure you understand the exact building codes, regulations, permits and application processes in your area.

Other steps to building a granny flat on your property include:

1. Checking your certificate of title – make sure there are no restrictions or covenants on your property that would prevent you from building a small second dwelling.
   
2. Getting a survey report for your land – a building surveyor must come to your property and make land boundary and height measurements to confirm whether you have enough space to build a small second dwelling, and what height your small second dwelling must be from ground level.
   
3. Buying construction plans or a kit – you can design your small second dwelling with a builder, architect, designer or draftsperson, who will then help you through the building process. Alternatively, you can buy an off-the-shelf or customised prefab granny flat kit. Try to get at least three quotes before deciding on a plan or kit.
   
4. Having your plans certified – you need your plans certified by a private certifier or a council certifier before you will get a construction certificate that allows you to start building. A local council certifier is generally cheaper, while a private certifier is generally quicker and more responsive.
   
5. Deciding on materials and fixtures – you will need to approve material options from your builder or kit supplier, or purchase them yourself if you plan to build your own small second dwelling from a prefab kit.
   
6. Employing labourers and tradespeople – decide which builders and labourers are right for your build. You will also need an electrician and a plumber to connect your granny flat.
   
7. Booking a property inspection – if your granny flat is for an elderly person, you might want to book a professional property inspection to make sure there are no safety issues for your loved one.
   

How much does a granny flat or small second dwelling cost?

Prices for small second dwellings can range from $100,000 to $170,000 or more depending on the size and type of the structure, remembering that the floor area must be 60sqm or less. When deciding on your budget, consider whether these fees are included in your granny flat’s cost:

• Survey and engineer reports
• Building plan/design
  
• Planning and/or construction permits
  
• Certifications
  
• Building materials
  
• Labour and tradespeople
  
• Fittings and fixtures.

Can a granny flat or small second home have solar panels?

Yes, but check with your local council. If you are in a heritage area, a planning permit may be required for solar panels if they are visible from the street, a lane or a park. Find out how solar panels work and what makes a good solar provider.

How do I insure a granny flat or small second dwelling?

Granny flats are considered ‘home improvements’ to your property and as such should be included in your regular building and contents insurance sum insured amount. You can use tools like RACV’s building calculator and contents calculator to work out how much to insure your entire property for.

What are some alternative options to building a granny flat?

If building a small second dwelling doesn’t suit your needs, here are some alternative options to consider:

• Home extension – if you’d simply like extra space, or if you and your elderly relative don’t mind living in the same building together, a home extension can be a smart solution. Home extensions do require stringent council approvals, but they also can add value to you home.
• Studio – building a studio could be right for you if you’d like a working or hobby space away from your main home, but don’t intend to house anyone in it.
• Subdivision or duplex - It may be possible to divide your land, with a separate title for each lot. For example, you may be interested in building a duplex, which is a residential building containing two homes that share a common wall but have separate titles. The State Government recently announced it will make it easier, faster and cheaper for Victorians to divide their blocks and build more homes. It is currently examining how Victoria's planning and building systems can be streamlined, with the aim of implementing the reforms by April 2025.
• Downsizing to a smaller dwelling such as an apartment – your elderly relatives may want a smaller or low-maintenance home, such as an apartment, without moving onto your property or living alone in a granny flat. Downsizing may have its own expenses and complications, but dedicated downsizing services can help manage the whole process.

^{The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Products issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.}