In 2009 the NSW Government released a new policy that has been well accepted by most property owners; including investors and owner occupiers alike. The Affordable Rental Housing - State Environmental Planning Policy (SEPP) is encouraging people to build more granny flats and Property Bloom has introduced this as an affordable development strategy that may help you to grow your property portfolio.
Not long ago, when the initial SEPP was initially introduced, there were limited granny flats being built, but now, four years after the strategy has been introduced, I often see company’s sign out the front of houses promoting the building of a granny flat. They seem to popping up quite often. The reason for this is that owners are starting to realise the financial potential of adding a granny flat to their own property or their investment property.
What does this strategy mean? It simply means that if you have a block over the size of 450sqm you are able to build a granny flat no larger than 60sqm on your existing property; you may get approval in approximately 10 days as long as it is complying with the council’s regulations. Not only will this add value to your home, but you can rent out the flat and do your bit to assist the chronic rental shortage we are seeing not only on the northern beaches but across NSW.
The new policy introduced by the NSW Government is a fabulous strategy as it allows more property owners to add value to their homes or investments in the short and long term. From a development perspective, it can be a quick and easy way to build your property portfolio and create high rental yields. Owners can benefit from cash-flow from the rent on two dwellings and also receive good depreciation benefits on the new flat. This means people can keep moving forward with their investment strategy. Unlike buying a single apartment for instance, which is likely to be negatively geared, adding a granny flat to a property that already has an existing dwelling can result in a cash-flow positive situation.
In the past granny flats were only permitted in certain residential zones, but this SEPP has opened up a whole new real estate door. The aim of the granny flat is to boost the supply of affordable rentals by providing housing for the elderly so families can support each other, as well as the younger generation who are living at home and are not in a position to move out just yet.
Government projections show us that single-person households are likely to be the fastest growing sector over the next 20 years, so demand is definitely there.
Small secondary dwellings are an attractive option for singles and couples who don't need a lot of room and are the most likely people to be under rental stress. Young people are also staying at home longer and granny flats can provide extra space for them and be a lifesaver for Baby Boomers who were hoping to empty their nest some time soon.
Property Bloom™ focuses on developing property, including granny flat developments, in the Hunter Region due to its affordability and strong, diverse economy. The area is earmarked for long term growth in the NSW government’s Lower Hunter Regional Strategy. The 25 year plan, provides for 160 000 new residents and 66 000 new jobs. With the existing mining, retail, construction, tourism, low unemployment rate and low rental vacancy rates, the Hunter Region ticks all the boxes for a strong region to be investing in.
We are finding properties for around $240,000 that may need a small cosmetic renovation of around $10,000. With the addition of a 2 bedroom granny flat which we can build for around $105,000; it’s a really affordable investment and a great way to dip your toe into development. These projects are creating a 8-9% gross rental yield. This type of development suits someone starting out in developing or an investor looking to create a cash flow positive investment.
We can use a private certifier and fast track the approval process. We’ll then manage all the fine details to create a cash flow positive investment for our clients. A granny flat development is a really quick process as we use a builder who prefabricates the walls of the flat in a factory. From the time the slab is laid, the flat can be fully completed within 2-3 months.
To take advantage of the NSW Government’s Affordable Rental Housing - State Environmental Planning Policy (SEPP) the regulations include:
Granny flat must be no more than 60sqm in size
Land must be more than 450sqm
Can only be one house and one granny flat on the land
The land cannot be subdivided
It meets the requirements of the Building Code of Australia
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“I was bitten by the property bug, there was no turning back.”
Jo Chivers proves that women can indeed have it all- a career that you are passionate about and a family. While all of this sounds great, it does require hard work, dedication, perseverance and a bit of risk-taking.
Jo’s love of property development inspired her to leave her corporate career and pursue her true passion. After educating herself in property investing, she started building up her own property portfolio. After purchasing a few blue chip properties in Sydney, she soon realised how negatively geared they were and began researching outside of Sydney. She discovered a more affordable, large region of NSW where she completed her first property development. Soon her friends were asking her to find them sites and manage their developments.
She realised there was a need for an all encompassing project management service and her business Property Bloom™ was born. Ten years down the track, she has developed over 60 properties for clients, creating literally hundreds of thousands of dollars in equity and high end yields.