With the eldest of the baby boomers well into their 60s this year, the challenges of an ageing population are confronting us all, with social spending and economic growth set to feel the pressure as Australia’s population ages. A 2008 Productivity Commission report, ‘Trends in Aged Care Services: some implications’, predicted that the proportion of the population aged over 65 would rise from one in seven in 2008 to around one in four by 2050. With this in mind, we bring the issue closer to home by looking at the pros and cons of looking after ageing family members by building a granny flat. If moving a parent into your place has ever crossed your mind, then read on.
Home owners looking to invest in a rental property without taking on significant debt are finding a solution in their own backyard. The granny flat is regaining popularity as a solution to tight rental markets, an ageing population and metropolitan land shortages, thanks to more relaxed legislation in some parts of Australia.
Whether it’s actually for granny, an adult child or an unrelated tenant, a second residence on your existing property can bring benefits, if you do your homework.
Regulations regarding construction and occupancy differ between states and territories, so do your homework before finalising plans. Planning rules can also vary among councils.
It is also important you get legal advice for your circumstances so if someone dies or has to go into care, or the younger family decides to sell, the financial implications are clear for everyone involved.
Taking the plunge into investment property can be daunting for home owners. With a granny flat, you can dip a toe without hefty debt and be positively geared from the get-go. For an investment of around $120,000 in a capital city, you are likely to reap $220-$330 a week in rent. Be sure to talk to your local real estate agent to find out what you can realistically expect your rental return to be.
Need extra money to fund the build?
Be sure to give us a call if you are considering creating a second residence. It might be a good opportunity to review your home loan and find a deal to better suit your circumstances.