Conveyancing Lawyers Property Law NSW

You might be thinking about building a granny flat or additional dwelling on your current property as a great way to maximise return on your investment, assist in housing a loved one, or ease the pressures of overcrowding within your current home. While there are several things to consider when planning your build, you should also think about how the future living arrangements will be documented so all parties are protected should a disagreement ensue.

Shared accommodation and the elderly

You might consider building an additional dwelling on your property to assist an elderly family member or dependent. In these circumstances, it is important to have a written agreement in place which sets out additional care and support arrangements between yourself and the person you will be supporting. Some things to consider include:

  • How will the additional dwelling be used? Is the dependant there on lease or licence?
  • Will the dependant pay rent?
  • Is there an agreement to provide additional care or support as well as housing?
  • Who will cover the cost of outgoings?
  • Is there an alternative arrangement should the current agreement prove unsuitable?
  • Do all parties have suitable powers of attorney and wills in place?
  • Will the arrangement affect pension entitlements?

If all the above can be set out clearly in a written document, conflicts, disagreements and tensions are likely to be avoided.

Planning your Build

In 2009 the NSW Government released a State Environment Planning Policy (SEPP) which meant that council approval is not required to build an additional self-contained home in the backyard of a property with an existing house. You will however be required to obtain a Complying Development Certificate (“CDC”) from your local council before commencing building work. To apply for a CDC for construction of an additional dwelling, the build must comply with the following:

  • Property must be a minimum of 450m2 in area.
  • Property must have residential zoning.
  • Property must have a minimum 12 metre width at the building line of the existing dwelling.
  • Maintain a 3m setback from the rear and 0.9m setback from the side boundaries.
  • Maintain 3m from any existing trees over 4m in height.
  • Maximum 60m2 external area for the additional dwelling.

Ensuring you can legally and safely build any additions to your home is essential before any promises or agreements are made.

Am I guaranteed return on my Investment?

You might be thinking about building an additional dwelling to make some extra cash. Certain demographics such as the elderly, university students or singles often look to backyard additional dwellings to have independent living and privacy at a relatively low price. If you think this type of arrangement could be for you, you should consider the following:

  • Obtain a rental assessment from a suitable real estate agent to ascertain the market rent you can receive.
  • Consider your income tax obligations, as well as capital gains tax, land tax and stamp duty.
  • Whether you need to obtain finance approval to start construction and how this cost weighs up against any likely future income from the property.
  • Consider the additional costs of advertising, drafting of agreements, designs and plans.

Getting as much advice as possible from third parties such as real estate agents, mortgage brokers, your accountant or financial advisor is always the best way to ensure you have considered everything relevant before your next move.

Please feel free to contact us if you have any questions in relation to this article.

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