Guide to granny flats for homeowners

grandmother and granddaughter embracing in grandma's wheelchair in a granny flat

Danny Baggs

Posted October 02, 2023

How many people can live in a granny flat? Is it easy to build a granny flat? How much do granny flats cost? Here's what you need to know about granny flats.
Granny flats can be a useful addition for families housing dependents who want to be close by but enjoy the privacy of their own space. Here are some important things to know about building a granny flat in Victoria.

Things you need to know about granny flats

What is a granny flat?

A granny flat is a second dwelling on your property that is separate from your main house. These buildings are known as ‘granny flats’ because they are typically used to house ill or elderly parents. Granny flats may be referred to as a Dependent Person’s Unit (DPU), a dwelling garden unit, or an accessory dwelling unit.

A granny flat is distinct from other secondary dwellings on your land, such as:

  • Units – for a secondary dwelling to be classified as a unit, the building must be self-contained and include a kitchen sink, a food preparation area, a toilet, a basin, and a shower or bath. A second dwelling typically also requires car parking and a backyard area. You will always need a planning permit to build a second dwelling on your land. 

  • Studios – a studio (sometimes called an outbuilding) is a separate building on your land that doesn’t have the facilities of a dwelling. Studios are most often used as a hobby space (e.g. an art studio) or a personal work-from-home office. Generally, councils will only allow a studio to have either a bathroom or a kitchen – this ensures that the studio won’t be turned into a dwelling.

Who can live in a granny flat?

Common granny flat occupants include a grandparent, an elderly parent, a teenage child, or a relative with a disability. Traditionally, a granny flat occupant had to be dependent on the person/s in the main home. New changes, however, mean that Victorians may be able to rent out their granny flat. Check your local council's requirements for the most up-to-date information.


woman washing dishes with her elderly parent or grandparent

Granny flats (also called DPUs) are ideal for an elderly relative. Image: Getty

What are the laws for granny flats in Victoria?

Requirements for granny flats are set by the Victoria Planning Provisions and prescribed in the Planning and Environment Act 1987. This is a guidance document that is used across the state for planning schemes to be constructed and administered by local councils.

Recent government announcements indicate that it will soon be easier to build a granny flat on your property. In September 2023 it was announced that granny flats no longer require a planning permit if they are less than 60 square metres.

While councils have different requirements, they typically require that the granny flat is movable and is only used to accommodate a person dependent on a resident of the main dwelling.

You can prove to your local council that your planned granny flat is movable or easily removable by ensuring:

  • The granny flat is built on stumps or piers, and not a fixed concrete slab

  • Construction materials are non-permanent 

  • Parts of the frame are screwed together, rather than nailed together like a permanent structure

  • Any plumbing and wiring can be easily dismantled and put back together at another location.

Make sure to check your local council’s guidelines for any further restrictions on granny flat size, privacy requirements, and other guidelines.


tradies installing a prefab granny flat

Some granny flats can be purchased in prefab kits. Image: Getty

How do I build a granny flat?

The Victorian government is making it easier to build a granny flat or dwelling garden unit. The first step is to check your local council's requirements and seek advice from a building professional. Laws and approval processes vary between local councils, so make sure you understand the exact building codes, regulations, permits and application processes in your area.

Other steps to building a granny flat on your property include:

  1. Checking your certificate of title – make sure there are no restrictions or covenants on your property that would prevent you from building a granny flat.

  2. Getting a survey report for your land – a building surveyor must come to your property and make land boundary and height measurements to confirm whether you have enough space to build a granny flat, and what height your granny flat must be from ground level.

  3. Buying construction plans or a kit – you can design your granny flat plans with a builder, architect, designer or draftsperson, who will then help you through the building process. Alternatively, you can buy an off-the-shelf or customised prefab granny flat kit. Try to get at least three quotes before deciding on a plan or kit.

  4. Having your plans certified – you need your plans certified by a private certifier or a council certifier before you will get a construction certificate that allows you to start building. A local council certifier is generally cheaper, while a private certifier is generally quicker and more responsive.

  5. Deciding on materials and fixtures – you will need to approve material options from your builder or kit supplier, or purchase them yourself if you plan to build your own granny flat from a prefab kit.

  6. Employing labourers and tradespeople – decide which builders and labourers are right for your build. You will also need an electrician and a plumber to connect your granny flat.

  7. Booking a property inspection – if your granny flat is for an elderly person, you might want to book a professional property inspection to make sure there are no safety issues for your loved one.

man digging pipelines for a granny flat build

Granny flats require adequate plumbing. Image: Getty

How much does a granny flat cost?

Granny flat prices can range from $100,000 to $150,000 or more depending on the size and type of the structure. When deciding on your budget, consider whether these fees are included in your granny flat’s cost:

  • Survey and engineer reports

  • Building plan/design

  • Planning and/or construction permits

  • Certifications

  • Building materials

  • Labour and tradespeople

  • Fittings and fixtures.

How do I insure a granny flat?

Granny flats are considered ‘home improvements’ to your property, and as such should be included in your regular building and contents insurance. You can use tools like RACV’s building calculator and contents calculator to work out how much to insure your entire property for.


woman holding yarn while her grandma knits in a wheelchair

You may prefer to build a home extension to house your parents. Image: Getty

What are some alternative options to building a granny flat?

If building a granny flat doesn’t suit your needs, here are some alternative options to consider:

  • Home extension – if you’d simply like extra space, or if you and your elderly relative don’t mind living in the same building together, a home extension can be a smart solution. Home extensions do require stringent council approvals, but they also can add value to you home.
  • Studio – building a studio could be right for you if you’d like a working or hobby space away from your main home, but don’t intend to house anyone in it.
  • Subdivision - it may be possible to divide your land into pieces, with a title created for each portion.
  • Downsizing to a smaller dwelling such as an apartment – your elderly relatives may want a smaller or low-maintenance home, such as an apartment, without moving onto your property or living alone in a granny flat.

    Downsizing may have its own expenses and complications, but dedicated downsizing services can help manage the whole process.


Insure your granny flat along with your main house. 
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The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Products issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.