Main page › Guides › Building a granny flat
How to build a granny flat, step by step
| Planning term | Secondary dwelling, under the Housing SEPP 2021[1] |
|---|---|
| Maximum floor area | 60 m²[2] |
| Minimum lot size | 450 m²[2] |
| Number per lot | One[2] |
| Sold separately? | No — cannot be subdivided from the main house[2] |
| Approval timing | Complying development in as little as 20 days; development application average 70 days[3] |
| Maximum deposit | 10% of the contract price[4] |
| *NSW state-level figures only. Councils add local controls, and other states differ. | |
A granny flat — in NSW planning law a secondary dwelling — is a second, self-contained home on a lot that already has a main house.[1] Building one with a prefab or modular builder follows the same broad path as a new house, but the first question is different: not "what can I build?" but "does my lot qualify at all?"
This page sets out the sequence as nine stages, each with a short checklist and a link to the detailed guide.
The nine stages at a glance §
| Stage | What you are settling | Detailed guide |
|---|---|---|
| 1. Decide the purpose | Family, rental income or short stay | Renting out a granny flat |
| 2. Check the lot | Size, zoning, overlays, title type | Granny flat rules by state |
| 3. Check tax and money effects | CGT, land tax, rates, pension | Tax and Centrelink |
| 4. Build the budget and finance | Build price plus site costs; how to pay | Granny flat cost calculator |
| 5. Design to the rules | Size, layout, energy rating | Layout and design |
| 6. Choose and check a builder | Licence, insurance, quotes | Licence and insurance checks |
| 7. Contract and approval | Deposit, payment schedule, pathway | Do you need council approval? |
| 8. Build, delivery and connection | Factory build, crane, services | Delivery and craneage |
| 9. Handover and use | Inspection, occupation, renting | Handover inspections |
Stage 1: Decide the purpose §
What the granny flat is for changes the rules that matter later: rental income brings tax and rates consequences, and family arrangements can affect pensions and capital gains tax.
Checklist:
- Family member, long-term tenant or short-stay guests? See renting out a granny flat and short-stay letting.
- Housing an older relative? Read granny flat interests and the pension and multigenerational living.
- Is a granny flat the right option at all? Compare granny flat vs extension, garage conversion vs secondary dwelling, dual occupancy vs granny flat and granny flat vs tiny home.
Stage 2: Check the lot §
In NSW the state-level limits are a lot of at least 450 m², a floor area of no more than 60 m² and one secondary dwelling per property.[2] The fast-track pathway is also closed to some sites regardless of design: land at risk of ember attack or flame exposure cannot use complying development,[1] and an individual lot in a strata or community title scheme does not qualify.[5]
Checklist:
- Lot size and zoning from your state page: granny flat rules by state. NSW detail: granny flat rules in NSW.
- Bushfire, flood and heritage overlays: bushfire attack levels and flood-prone land.
- Title type — Torrens, strata or community title.
- Sewer lines and easements in the backyard: building over sewers and easements.
- Side or rear access wide enough for delivery, or room for a crane to lift over the house.
Stage 3: Check tax and money effects §
A second dwelling can change your council rates, land tax, capital gains tax position and pension entitlements. Check these before you commit, not after.
Checklist:
- Tax and Centrelink.
- Granny flat and the main residence CGT exemption and granny flat arrangements CGT exemption.
- Rates and land tax on a second dwelling.
- If renting: rental deductions.
- Resale effects: does a granny flat add value and selling a property with a granny flat.
Stage 4: Build the budget and finance §
The build price is only part of the budget. Builder-published guidance notes that transport and installation are sometimes included only within a set radius of the factory.[6] In NSW, developer contributions under section 7.11 may also apply to secondary dwellings, at a rate set by each council.[7]
Checklist:
- Build price by state: NSW, VIC, QLD, WA, SA, TAS, ACT and NT. These are commercial figures.
- Rough total: granny flat cost calculator.
- Site works, connections and approval fees: site works costs, service connections and DA fees and developer contributions.
- How to pay for it: granny flat finance.
- Work through the hidden cost checklist.
Stage 5: Design to the rules §
Designing to the fast-track standards only helps if your lot qualifies for the fast-track pathway, so finish Stage 2 first.
Checklist:
- Floor area within your state's limit.
- Layout: granny flat layout and design.
- Energy rating: the 7-star NatHERS rule.
- Step-free access if it will house an older relative: Livable Housing Design Standard.
- Pre-approved designs: ask whether the builder's designs fit a fast-track pathway in your state.
Stage 6: Choose and check a builder §
Get itemised quotes from at least three builders on the same scope, then check each one. In NSW the licence search runs by name, licence number or ABN.[8]
Checklist:
- Licence number, class and status, and the legal entity name: licence and insurance checks.
- Itemised quotes, not headline prices: choosing a prefab builder.
- If the granny flat is prefabricated or transportable, confirm who handles the extra approval this can trigger in NSW (see Stage 7).
- The builder directory lists companies by state. Inclusion is not an endorsement and entries have not been independently verified.
Stage 7: Contract and approval §
In NSW the deposit cannot exceed 10 percent, contracts over A$20,000 must include a progress payment schedule and a five clear business day cooling-off period, and the builder cannot ask for a deposit before Home Building Compensation cover is in place where it is required.[4]
On approval, a NSW proposal that meets the complying development standards can be approved in as little as 20 days, against an average of 70 days for a development application.[3] One certificate can cover both the main house and the granny flat.[1] Where the granny flat is a prefabricated, manufactured or transportable dwelling, the City of Newcastle notes that a separate regulation on moveable dwellings applies in addition to planning approval.[9]
Checklist:
- Deposit within the legal cap, paid only after the insurance certificate is checked.
- Progress payments tied to completed stages: progress payments.
- Approval pathway confirmed: do you need council approval for a granny flat.
- For a transportable unit, the extra approval identified: transportable home rules in NSW.
- A solicitor's review before signing.
Stage 8: Build, delivery and connection §
Backyard sites are often the hardest to deliver to. Builder-published guidance puts crane hire at roughly A$260 to A$1,530 per hour, usually with a four to ten hour minimum.[6]
Checklist:
- Crane position and lift path over the main house agreed: delivery, transport and craneage.
- Neighbours told about delivery day.
- Separate or shared meters for power and water decided: service connections.
- Factory photos or an inspection before linings close up.
Stage 9: Handover and use §
In NSW, statutory warranties run for six years for major defects and two years for other defects, starting from completion.[4]
Checklist:
- Independent inspection before final payment: handover inspections.
- Occupation certificate issued before anyone moves in.
- Insurance for the second dwelling arranged.
- If renting, the tenancy, tax and rates changes from Stage 3 put in place.
Related step-by-step guides §
- How to build a modular home, step by step
- How to get a tiny home, step by step
- How to buy a transportable home, step by step
What is not covered here §
Lot-size limits, floor-area limits, approval timeframes, contract rules and warranty periods for states other than New South Wales are not set out on this page; the state rules pages carry what the sources compiled on this site support. Local council controls such as setbacks, open space, privacy and parking are not covered and vary by council.
This page does not give a total cost or timeline for a granny flat. The figures on the linked cost pages are builder-published commercial guidance, not independent survey data.
Sent to info@modularlivingaustralia.com.au and handled by a person. See Privacy.
References §
- NSW Department of Planning, Housing and Infrastructure — Secondary dwellings (granny flats). Granny flats are permitted in designated residential zones under State Environmental Planning Policy (Housing) 2021; a council or private certifier can issue one complying development certificate covering both dwellings; additional requirements apply on bushfire-prone land, and land at risk of ember attack or flame exposure cannot use complying development. planning.nsw.gov.au/the-planning-system/disaster-recovery/secondary-dwellings-granny-flats
- Wollongong City Council — Granny flats. A secondary dwelling sits on the same property as a single existing home with at least 450 m² of land, has no more than 60 m² of floor area, only one is permitted per property, and it cannot be subdivided from the main house and sold separately. wollongong.nsw.gov.au/plan-and-build/building-and-renovating/common-residential-improvements/granny-flats
- NSW Department of Planning, Housing and Infrastructure — Complying development. Fast-tracked approvals can be issued in as little as 20 days, or 10 days under the NSW Housing Pattern Book pathway, compared with an average development application determination time of 70 days. planning.nsw.gov.au/assess-and-regulate/development-assessment/planning-approval-pathways/complying-development
- NSW Government (Building Commission NSW) — Contracts for residential building work, last updated 29 April 2026. A written contract is required where the price is over A$5,000 including GST; contracts over A$20,000 need a progress payment schedule, a five clear business day cooling-off period and a Home Building Compensation certificate. The maximum deposit is 10 percent, and no deposit may be requested before required cover is in place. Statutory warranties run six years for major defects and two years for other defects from completion. nsw.gov.au/housing-and-construction/building-or-renovating-a-home/preparing/contracts
- NSW Planning Portal — Granny Flats. To be certified as complying development, a granny flat must be on the same lot as the principal dwelling, not an individual lot in a strata plan or community title scheme. planningportal.nsw.gov.au/development-and-assessment/planning-approval-pathways/complying-development/granny-flats
- Built by Modify — 2026 modular cost guide. Transport and installation are sometimes included only within a set radius of the factory; crane hire roughly A$260 to A$1,530 per hour with four to ten hour minimums. Builder-published commercial guidance, not independent survey data. builtbymodify.com.au/blogs/modular-home-cost
- Blacktown City Council — Secondary dwellings (granny flats). Developer contributions under section 7.11 of the Environmental Planning and Assessment Act may apply to secondary dwellings. blacktown.nsw.gov.au/Plan-build/Stage-1-find-out/Secondary-Dwellings-Granny-Flats
- Service NSW — Check a builder or tradesperson licence. The search can be run by name, licence number or ABN. service.nsw.gov.au/transaction/check-a-builder-or-tradesperson-licence
- City of Newcastle — Secondary dwellings. A secondary dwelling may be a prefabricated, manufactured or transportable dwelling, in which case Part 3 of the Local Government (Manufactured Home Estates, Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation also applies. Infrastructure contributions may be payable. newcastle.nsw.gov.au/development/building-and-construction/building-and-development-information-guides/secondary-dwellings-granny-flats
Figures are as published by the sources above at their respective dates and are paraphrased summaries, not verbatim reproductions. Verify current pricing and rules directly with builders, lenders and planning authorities.