Pros and Cons of Granny Flats in Australia

Are you considering investing in a secondary residence in your backyard for rental purposes, family use or for elderly parents?

If your answer is YES, we’re pretty sure you are pondering on the advantages and disadvantages of building one before making the final decision.

Secondary residence or granny flats (as they are most commonly known) are a small unit or apartment separate from your main house in your backyard. A brief history of the granny flat is that they became popular with aging parents in mind. The purpose of the granny flat, in the early years, was to keep families together.  Parents or in-laws who prefer to stay close to their loved ones are enjoying the benefits of the granny flat. The need to stay in-home care has now become a major priority for having a secondary residence. The concept of the granny flat has evolved and has now become known to be a great source of income and a necessity for families as well as the name being changed to secondary residences.

Like all things, there are Pros and Cons for having a secondary residence. Here are just a few of them.

A cost-efficient option for tenants, live-in owners and investors.Once you build a secondary residences on your block you can no longer subdivide
Rental income in your backyard. Your Pod can be positively geared as soon as you rent it.There could potentially be “ unforeseen” additional costs e.g. hitting rock when excavating or upgrading electricity/gas connections.
A great way to keep you and your family closer as they become teenagers or older.Tenants may not come to terms with the homeowners being 3m or more in distance apart.
Promotes independence and privacy while keeping secure and safeNo pool, gym or facilities like an apartment complex
Increase in the resale value of your home 
No one living beside or next to you like an apartment (minimum setbacks are required) 

(If you can think of any pros and cons, please contact us, as we would love to add them and help others make the decision if it is right for them or not)


Secondary residences are a great way of keeping you and your loved ones connected. The inter-generational way of living may strengthen the bond in families while still keeping a sufficient amount of independence and privacy. 

Another benefit is that a secondary residence could potentially increase the resale value of your home. Homes with “secondary dwellings” typically gain an increase in value.

They can serve as a more cost-efficient alternative then an apartment for tenants and provide a source of income for the homeowner. 

For tenants, renting a secondary residence on a property could be more affordable as they are typically cheaper to build rather than in a unit complex investment property. 


Now let’s look at the Cons or disadvantages for secondary residences. There is also a handful, one of the biggest considerations you need to know is that you can’t subdivide. In the state of New South Wales, you are unable to build a granny flat if your property is subdivided, thus, once you are able to build a granny flat, you cannot subdivide.

Building a secondary residence means there are potential unforeseen and additional costs. Although this type of property is deemed as the more cost-efficient alternative, many people overlook the additional funds that fit into their initial budget. 

Another thing to consider is to be sure of your reasons for a secondary residence and to do your homework for your particular rental market in your area.

Some tenants may not like the proximity of owners being close, which may be a disadvantage, but you would only rent to tenants that are in acceptance of this. You need to take a close look into your State and Territory Legislations when it comes to a building and leasing of the property in your area. Do your homework for your area.


The most important thing above all the pros and cons is that the good outweighs the bad. 

The benefits that it provides remain constant. Just make sure to do plenty of research and planning before investing in a granny flat and you’ll be sure you have made the right decision. Get quotes from companies and compare what they could offer and if they fit your budget.

Modern designs for secondary residences are also now in the marketplace, an example can be found here.

We are The Pod Canberra. We are located in Canberra and build in the surrounding regions. Any questions please contact us.

0403 843 763 | 1300 THE POD (1300 843 763)

This information is general in nature and written by The Pod Canberra team specialising in luxury secondary residences in Canberra and surrounds.

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