FINANCIAL CONSIDERATIONS FOR BUILDING A GRANNY FLAT
- Granny and Co Homes
- March 18, 2021
- Granny Flat, Home Extension, Investment, Retirement Options, Small Home Solutions
- 0 Comments
Granny flats are a great way to give your family some extra room, increase the value of your property, and help bring in some extra income. But building a granny flat is a big task that takes careful consideration and planning.
From deciding on your perfect granny flat design and finding the right builder, to picking all the final touches and furnishings, there are a lot of details to tick off before you start building. There is also a lot of financial considerations that you need to take into account when planning on building a granny flat – and if you’re not careful these can really affect your budget down the track!
To make sure you’re ready to start building your perfect granny flat, we’ve put together some financial questions to tick off early.
Consider the overall cost of building a granny flat
It’s important to understand all the costs that are involved in the construction of your granny flat. Your budget will need to include materials, labour, landscaping, electrical and plumbing costs, and any work that may need to be done to prepare the land before building starts. Have a thorough chat with your chosen builder about labour costs if construction goes over your timeline, whether you’ll be paying for materials directly from the builder or the wholesaler, and what budget items are non-negotiable.
Have a chat with your insurance provider
Once your granny flat is built and furnished you’ll need to make sure that it’s covered under your current home and contents insurance. Make sure to have a chat with your insurance provider to make sure you don’t get surprised by any red tape or hidden fees.
Check for any Council permits and application fees
What permits or Council approvals you’ll need to build a granny flat will depend on what city and suburb you live in. Make sure to check the costs of any relevant permits or approvals for any application or processing fees.
Don’t forget to call your Accountant!
If you plan to use your granny flat as a home office workspace then it might be a good idea to have a quick chat to your Accountant to see if some of the costs can be claimed as a work-related expense. Likewise if you intend to rent your new granny flat out to long-term tenants or as a short-term holiday home on AirBnB then check if this extra income will affect your annual tax return.
Make sure to budget for extra maintenance, water, and electricity
Your new granny flat will give you lots of extra space and make having visitors stay much easier, but it can also cause an increase to your utility bills and require ongoing maintenance. When doing your budget add a little extra to cover the additional electricity and water costs, and be prepared to pay for maintenance to air conditioning systems, plumbing, and general upkeep.
Once it’s built.. You’ll need some extra furniture…
One of the most important things to include in your budget is the furnishings you’ll need once the build is complete. If you plan on using your new granny flat for friends and family, or short term rentals, you’ll need to purchase bedding, couches, a fridge, kitchen and cookware, bathroom amenities, and potentially laundry appliances like a washing machine and dryer. All of these things can add up pretty quickly, so make sure you’ve put together a list before you start building!