Property

Why Victoria is lagging on granny flats

couple sitting on wooden stairs of a granny flat

Miranda Tay

Posted February 03, 2019

Tough planning requirements restrict the Victorian granny flat market.

Consider the granny flat. It’s compact, cosy and close by. Yet even in our notoriously tight rental market, it’s something of a rarity. Why? 

In Victoria, the answer could have more implications than anywhere else in the country. The state has some of the toughest regulations on granny flats – and meeting the conditions can be time-consuming and expensive.

Council laws vary, but typically the occupant must be a dependant, and the building must be removed once they die or move out.

Untapped potential

Suppliers believe there’s a strong pent-up demand in Victoria for granny flats. “Any changes in planning requirements bringing Victoria in line with other states would see a significant increase in demand,” says Lisa McLeod, sales manager for building company Todd Devine Homes, a specialist in granny flats and relocatable homes.  

Victoria is the only remaining state that does not permit leasing out a granny flat, says Jackson Yin, executive director of kit home company iBuild.

He says that if the state government implemented legislation similar to New South Wales, Queensland and Western Australia to simplify and speed up the approval process and reduce costs, it could increase the availability of affordable rental housing. He says that his company supplies five times more granny flats to NSW than Victoria, although it is Melbourne-based. 

Affordable solution

While Victoria might have missed the memo, granny flats have come a long way since the days of the old-fashioned fibro bungalow.  

They’ve evolved over the years to become more environmentally sustainable, DIY-friendly and, in the case of Victorian company Nestd, socially progressive. Profits from its range of Australian-made, architect-designed studios (as pictured) go to help young people at risk of homelessness via the charity Kids Under Cover. 

woman opening cupboard in interior kitchen of granny flat

Moving in to a granny flat can come from the need to live closer to family, whether for health reasons, security or just to be around for your family.


For Griffith University’s Heather Shearer, who researches urban sustainability and is a member of the Planning Institute of Australia, granny flats are a “part” solution to the complex issues of housing affordability. 

“Allowing more houses, like tiny houses and granny flats, will help the situation some, but it really needs broader and higher-level changes, such as getting rid of negative gearing, improving public transport dramatically and business/employment to be less centralised,” she says.

“A tiny home on wheels can be moved anywhere and theoretically placed anywhere but, at the moment, most of these are in rural areas,” Heather notes.  

“The housing affordability crisis is predominantly in urban areas. Parts of Melbourne would be suitable but only where there are detached houses.”

Social benefits

As Heather points out, to have a granny flat you must first have property, which doesn’t help with mortgage affordability. But a granny flat can certainly help with rental affordability.  

On the social front, a granny flat can also help strengthen family ties. “Our clients contact us as they want to live closer to family, whether for health reasons, security or just to be around for their grandchildren,” says Lisa McLeod. 

Secondary dwellings also provide flexibility of living arrangements and communal benefits such as the sharing of household responsibilities in child and pet care, says Heather.  

 “We have lost many of the benefits of living in closer communities. We live far from family, and children miss out on, for example, being with their grandparents. 

“Throughout human history, people have lived in multi-generational households, with shared spaces, and that is, arguably, the best model for successful living, for bringing up children, and for fostering community.” 

Backyard bliss

For retired IT support worker Virginia Spriggs, shifting to a granny flat on her daughter’s property in Melbourne’s outer east has been a great move for the whole family.  

“After my husband passed away, I moved to Mount Evelyn where my daughter Kirsty and granddaughter Ariyia live,” she says. 

“I built a granny flat on their land with the proceeds from my house sale. I have a good-size lounge room and kitchen – and storage, there’s more than enough storage.” 

With added extras including water tanks and bamboo floorboards, Virginia’s granny flat cost approximately $140,000, including a garden, and took three months to build. 

“I love it here,” she says. “I mind Ariyia while Kirsty is at work. I take her to creche, prepare her dinner – it works extremely well. Our driveways connect.  

“Ariyia has a cubby house about three metres away. She calls out to me from the back window, and she comes over when she’s cranky with mummy.”