Secondary suites are seeing an enormous surge in popularity around the world – but particularly in Australia. If you are interested in an affordable means of adding value to your property, or even offsetting the cost of your mortgage repayments, building a secondary suite may be an ideal option.
In short, a secondary suite is an additional dwelling built onto an existing property. In Australia, they are referred to as granny flats, as these dwellings are often intended for elderly relatives moving in with the extended family. However, this term is not exclusive. It also applies to any small, self-contained residence on a larger property.
A secondary suite is good for much more than caring for ageing parents. In addition, it can also add value to the home or even serve as a source of additional income for households. If you are thinking of adding a unit to your property, it is crucial that you look into the local zoning laws. In Australia, these vary from city to city and state to state. However, the following stipulations usually apply:
- They may only be built in areas that are zoned for residential properties.
- The property must meet minimum size requirements in order to accommodate the additional residence.
- The new residence must be owned by the same person who owns the encompassing property.
- The residence must be accessible to pedestrians.
For that reason, if you live in Victoria and are interested in adding a freestanding residence to your property, it is important to research local laws related to building granny flats in Melbourne to confirm that your property qualifies. You can also find plenty of information through local builders, who should be up to date on all of the relevant zoning laws and regulations.
Secondary Suites and the Boomerang Generation
The so-called ‘Boomerang Generation’ refers to the current generation of relatively young adults, many of whom cannot afford to purchase their own properties. Rather than spending a significant amount of their income on rent, many of these young people are returning home and living on the same property with their families.
This is fuelling demand for home extensions. It makes sound financial sense, too, as spending that money on home improvements and add-ons ultimately serves to keep wealth within the family. And in some places, governments are even relaxing planning laws to make this easier (see this article about government proposals in the UK).
Here are a few key reasons that secondary suites make sense in the context of the Boomerang Generation:
- They can salvage a negatively geared property.
The Australian housing market is notoriously unbalanced, and it is far too common for families to find themselves in a situation in which the house they live in costs more to own than it is actually worth (negative gearing). Adding an additional rental unit can turn this situation around even doing so does not add value to the property. The additional income generated offsets the costs of operating the property and have the potential to push it into positively geared territory.
- Tenants often prefer them to standard flats.
These days, it is relatively easy to find tenants for secondary suites – especially if the unit has plenty of privacy. These properties often include access to a garden area, and are more likely to be pet friendly than a standard flat.
- They create additional streams of income for existing rental properties.
Finances are tight for households across much of the Western world, and any additional source of income is much appreciated. If you already own a property, adding a rental unit is a great way to increase your household’s monthly income, especially given the affordability of prefabricated granny flats in Victoria.
- They help families consolidate funds.
We have already mentioned the fact that a secondary suite allows families to hang on to more of their collective wealth. Similarly, adding a unit like this to the property makes it possible to consolidate funds (saving money on appliances, tools and similar expenses). This allows younger family members to invest more in their own education, professional development and other quality of life enhancements.
Housing is expensive, and building a secondary suite is a great way to help households avoid financial collapse. If you’re interested in learning more, consult with a local builder to see what options are available in your area