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How Much Does It Cost To Build A Granny Flat?

Posted 2 September 2022
Beautiful Granny Flat on a budgetForrest Small Homes Owner
If you want to extend your home to have more living space, create a private office, or set up an independent living space for family members, it’s well worth looking into a granny flat for your property.

Granny flats are affordable, flexible, and offer a great opportunity to open your home to family or even private renters.

With holiday rental apps like Airbnb booming, more NSW families are finding ways to earn extra income by adding a granny flat and renting it out – either short or long term.

Whatever your current or future property goals, a granny flat has the flexibility to increase your lifestyle options. In this article, we’ve broken down the costs of building a granny flat to help determine the granny flat type and budget you need.

The table below gives you a realistic estimate of the price range you can expect all-inclusive granny flat quotes to fall into.

Granny Flat style
One Bedroom$150,000 – $200,000
Two Bedroom$250,000 – $300,000
Three Bedroom$300,000 – $350,000
Two Storey$280,000 – $320,000
Expected completion costs with all expenses including council fees, concrete slabs, labour and builders plans.

Even though the room numbers increase there isn’t a dramatic shift in price as the maximum allowed size for Granny Flats in NSW is 60mso sizes are similar, it’s just a matter of how you choose to allocate the space.

What is a Granny Flat

A granny flat is a detached unit set on private property, designed to be fully self-contained for independent living, including a bathroom, kitchen, outdoor space and private access.

A granny flat is so named because it’s traditionally been a great way to offer housing solutions for older, independent relatives who aren’t ready for – or can’t afford –  aged care facilities. The units are structured to be low maintenance and cost-effective to enable retirees to be close to loved ones while providing some privacy.

Care for ageing loved ones might have been the beginning of the granny flat journey but there has been a big shift in granny flat use over the years. Homeowners have discovered a wide variety of uses that make having a granny flat a rewarding and valuable investment.

Who are Granny Flats for?

Don’t be fooled by the name, granny flats are not just for grannies.

With the exception of Victoria (where granny flats are only available to immediate family members) you can rent a granny flat out to anyone to add an extra income stream or keep it within the family to enhance your lifestyle. This makes granny flats an amazingly versatile space that can be used for a number of opportunities including:

  • Private rental for extra income
  • Short stay rental (i.e. Airbnb)
  • Teenage retreat
  • Home office
  • Guest house
  • Art or music studio
  • Hobby space
  • A way for empty nesters to downsize and rent their family home
  • A way to get more family living space for less than a home extension

These options can be even more valuable and rewarding if they come with their own private entrance so you can offer guests or clients a way in without going through your private property or home.

Cost of building a Granny Flat

What does it cost to build a granny flat?

How much you spend on your granny flat will come down to your personal requirements and what you want your granny flat to be for. 

For example, if you are building additional income through a long-term lease or a holiday rental, spending a little more upfront to get higher-quality materials and fittings will allow you to make your property desirable. Extra expenses might include a fence to add more privacy and a landscaped garden. You’ll be more likely to recoup the money you have spent through the income you earn.

As well as the type of materials and fittings you choose, other factors that can influence the price include the size of the granny flat, if it’s elevated and if you want any custom features.

Custom-built granny flats vs kits vs flat packs

Kits and Flat Packs$100,000 – $200,000 + GST
Custom Build$250,000 – $300,000 + GST

Granny flats can be custom built, pre-assembled kits and flat packed.

Kits and flat packs come pre-cut so you won’t be able to change window sizes and doorways unless you move up to a custom build. Just keep in mind that making changes will give you a higher quality finish and a more unique look and feel, however, it will come at a price. If you are looking for a budget granny flat, you’ll want to stick to the factory specifications as much as possible.

Kits and flat packs

If you are building a granny flat on a budget then a kit and flat pack will be instantly appealing. You can expect kit prices to fall between $100,000 and $200,000. Prices will vary considerably from different kit builders depending on their inclusions and how luxurious they are. 

Kits and flat packs can be shipped to any location, making them more accessible and adding flexibility. A flat-pack granny flat will come with everything ready to put together. Once they arrive, there’s still some work to do. As well as the construction you’ll need to ensure you have a solid foundation and professional water and electricity connections. 

Buying a granny flat as a kit is less work than a flat-pack as it comes fully assembled, giving you faster build times. You’ll need to make sure the foundation, electricity and water are included in the package or find accurate quotes and quality professionals to complete this for you.

No matter what option you choose, be sure to get a number of quotes from reliable builders and suppliers and read the fine print carefully. A cheaper quote might turn out to be the most expensive after all the ‘hidden’ extras are added. 

If your quote doesn’t cover any of the following, do your research to know what the added costs will be as these expenses are unavoidable:

  • Council approval
  • Site costs
  • Electrical and plumbing work
  • Service connections
  • Blinds, floor finishes, shower and bathroom fittings
  • Power points
  • Kitchen (including benchtops)
  • Laundry tub and splashbacks
  • Lighting (for best results choose energy-efficient lighting)

Custom Granny Flats

If you want to make any changes to the preset sizes of a flat pack, you’ll be looking at a custom build. The materials making up the granny flat are basically the same but you get far more choice, flexibility and cooperation around setting out the building to be exactly what you want particularly around:

  • Finishing details like cladding
  • Roof types
  • Room layouts
  • Elevated foundations
  • Quality benchtops and fittings 
  • Window sizes
  • Ceiling height
  • Door frame width
  • Entry (steps, ramp etc)

Prices for a high-quality custom-built granny flat with all the trimmings range from $250,000 to $300,000.

One of the big reasons people choose a custom granny flat is if they have a high-end property and want their stand-alone building to match or they want to rent out the granny flat with a feeling of a quality home. In these cases, a $100,000 kit that looks like a shed isn’t going to cut it. 

Look for obligation-free on-site quotes with local council fees, service connections, builder’s materials and fittings as the minimum inclusions.

Two Story Granny Flat

Costs of Different Granny Flat Styles (ex GST)

1 Bedroom 

Minimum size: 35m².  Medium size 45m2. Large size 60m2

Complete, all-inclusive builds typically cost between $150,000 – $200,000.

A one-bedroom granny flat is an affordable option that makes great use of a little extra property space. It’s best to go over a cheaper quote carefully to see what makes the price so low, chances are there is a lot left out. So even a $15,000 quote can end up costing $150,000 or more by the end.

2 Bedroom 

The maximum size in NSW is 60m²

A complete two-bed granny flat with all the inclusions accounted for will cost between $250,000 and $300,000. 

At these prices, you should see a quote that includes everything you need to move in including:

  • Site costs
  • Design and approvals
  • Build price
  • Standard inclusions such as concrete slab, flooring and lighting

Lower offers (i.e. $200,000 or so) probably have some costs still to come.

Two-bedroom granny flats are the perfect blend of comfort and convenience, making them the first choice for investors, family-occupied builds, and those making a space for private guests. 

3 Bedroom 

Maximum allowable size: 60m²

A complete, all-inclusive three-bed granny flat will cost between $300,000 and $350,000 although if you are cutting costs on finishes and fittings you might be able to scrape through at a lower cost of $150,000.

Three bedrooms are a popular choice for investors, especially if there is enough space to provide a private yard with the flat. You basically get the same functionality as a 3-bedroom home, only at a significantly reduced build price.

One thing to be really careful of here is effective space. The maximum granny flat size in NSW is 60m² so to fit in the extra bedroom you are going to have to sacrifice space from somewhere else which might be the kitchen and living areas.


The total floor space (up and down stairs combined) is 60m2.

A complete build with all inclusions will run in the range of $280,000 – $320,000.

Two-storey builds can really work for difficult-sized yards as well as properties with private rear access. You have a lot of flexibility in how you split your 60m² across the two levels so you can really make this a unique build.

Building up will bring in some extra council regulations but these are typically covered in the initial approval costs so it won’t cost you significantly more, as long as your design plan is able to take them into account correctly the first time.

Other Costs to Consider

As well as inclusions (and exclusions) that will make a big change to the quote you receive that we have already mentioned, there may be site conditions that affect the cost to build your granny flat. For example, concrete foundations should be included in the package price, however,  there may be circumstances with sloped land or land unsuitable for slabs, such as flood-prone areas, which require elevated bearers and joists which come at a significantly increased price. 

Extra costs that might not be included – but need to be factored in include:

  • Surveyors report
  • Design planning
  • Engineering diagrams and Engineers advice (may not be required)
  • Private or council certifier
  • Building materials
  • Labour (electrician, plumber, builder)
  • Landscaping

Make sure you discuss this with your builder during the initial onsite quote so you don’t wind up with some nasty surprises at the end of your build.

Some additional costs are optional, even on flat packs and kits such as more decorative cladding, higher walls, quality flooring and high-end kitchen benchtops.

Assisted Living with Family

Do I need council approval to build a granny flat?

Most states and territories specify a maximum size for a granny flat. In NSW, for example, the site must be at least 450m2 in area, have a 12m street frontage and the granny flat can be no bigger than 60m2. Just like building a home, a granny flat will require a qualified builder, plumber and electrician in order to comply with Australian building standards.

Things that council may consider as part of your planning include:

  • The size of your block
  • How far the granny flat is from the boundary 
  • How far the granny flat is from the existing house
  • The dimensions of the granny flat
  • A Development Approval (DA) application
  • Sea level heights based on the AHD (Australian Height Datum)

Contact your local council to ask about the rules for building a granny flat in your area. Different local councils have different rules and can vary in fees so this is an essential starting point. 

Cost of backyard flat

Will a granny flat increase the value of my home?

Part of the appeal is you will get roughly the same rent for your granny flat – with a cheaper build – as you would for an established home. That makes the potential return on investment higher, especially if you opt for more flexible short-term rentals which might even yield $300 a night or more.

You’ll also have a strong chance of increasing your property sale value if you sell your home, with new owners looking for the flexibility of a granny flat or seeing the potential to use it for an extra income stream or work-from-home option. CoreLogic conducted research that suggested a granny flat can boost the value of your home by as much as 30%.

If you have extra space on your property and would like to maximise your lifestyle choices by providing space for your family or an extra income stream through renting, granny flats are an affordable and flexible option any homeowner can take up.

Before you commit to a builder make sure you get at least three quotes from reliable companies and carefully check their inclusions to know exactly what your budget needs to be. Hiring a quality, experienced granny flat provider to build a granny flat will take out the stress and uncertainty and set you up for a smooth and solid home extension.

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