What’s the true value of potential?

In 2009, the NSW Government relaxed the rules to let homeowners build a complying granny flat on their property, easily and quickly, as a way to try and address the lack of affordable housing in most parts of the state. In Newcastle, part of the Hunter Region of NSW, property values are almost comparable with those in Sydney, driven by the previous mining boom in Cessnock, Singleton and other neighbouring areas, along with in influx of university students moving to the area to study and the revitalisation of the city more generally.

Using an un-built granny flat to boost a property’s value

Now real estate agents in the Newcastle area are using the “relaxed granny flat rules” to sell properties. For instance, Chad Dunn, an agent at Century 21 Novocastrian, regularly uses the relaxed granny flat rules as a way to boost the sale of his listings, even though a granny flat hasn’t actually been approved for the property! He even regularly includes the details of a local granny flat company, Backspace Living, in his property advertisements on realestate.com.au and Domain. That, again, is despite the property not having had any granny flat plans approved.

Only “approved” developments boost value

Real estate agents love to tout the properties as being a ‘renovator’s delight’ or ‘fixer upper’, but these are just adjectives; words that describe the home being sold. Let’s remember that the fact a home can be renovated doesn’t exactly add value. It merely appeals to particular buyers, because the truth is, any home can be renovated, whether it needs it or not.

The same can be said for granny flats. Only approved developments boost value. The fact a property meets the basic criteria for a granny flat — i.e., land size — doesn’t automatically boost its value. Beware of these tactics as both a buyer and seller.

Are you looking to invest in a granny flat or see how viable it is, continue reading our blog or register for our free Granny Flat Investment Spreadsheet and Workbook