Do You Have a Granny Flat for Rent?

Attached Granny Flat

Granny flats are very popular among residential rental property investors in New Zealand. However, a granny flat can be rented out legally only when it is a separate dwelling. How will you convert your granny flat to be a separate dwelling, via building detachment or land division?

Generally, the average two-lot subdivision can cost around $120,000 – 150,000 for an approved consent, a new Record of Title, professional fees and other requirements.

Land subdivision is quite expensive. Many property owners choose an easier way to turn their granny flats into rentals – gain a permission from city council to detach the granny flat into a separate dwelling and rent it out. In this way, there will be a separate dwelling record of this granny flat in the city council, so it can be rented legally.

What is dwelling?

Dwelling is a building or part of a building that is used, or intended to be used, for human habitation. There can be more than one dwelling in a building. For example, the main house and the granny flat are dwellings in a building.

How to rent out a granny flat without a land division?

It is not important if the separate dwelling is connected with the main house. A separate dwelling has:

1. its own cooking, toilet and washing facilities;
2. a separate entrance to the main house (this could be an external door, or a door from a landing or hallway within the main house).

If (i) you live in the main house and the tenant does not have access to facilities in the main house, or (ii) you rent out the granny flat and the main house as separate tenancies, then the tenant is covered by the Residential Tenancies Act 1986. You must ensure your granny flat can fulfil the legal requirements.

1. Check the granny flat was built legally and there is no illegal change on it, especially if you bought the property from a seller who lived in the property and has never rented it out;
2. Check the granny flat has a separate dwelling record and rental permission in city council;
3. Ensure the granny flat complies with the healthy homes standards. smoke alarm requirements as well as insulation requirements;
4. Ensure the granny flat has its own entrance, own cooking, toilet and washing facilities that can satisfy tenant’s habitation needs (more details in Housing Improvement Regulations 1947);
5. Make sure you have installed a separate water and electricity meters if utilities are not included in the rent.

If the flat does not meet these requirements, you would be in breach of landlord’s obligations under unlawful premises in the Residential Tenancies Act 1986. Then, the tenant can apply to the Tenancy Tribunal to remedy this.

If you have any questions or concerns about renting a granny flat, you’re more than welcome to contact us on 09 570 8078 or book our free consultation.