Managing a Granny Flat Tenancy
Managing a property with a granny flat requires a dual-tenancy approach — two separate tenants, two leases, one property manager.
Our dual-tenancy management fee: 6.90% + GST of total rent collected (both main house and granny flat combined).
What's included:
- Separate lease agreements for main house and granny flat
- Independent tenant screening for each tenancy
- Separate condition reports and routine inspections
- Coordinated maintenance (shared vs individual responsibility)
- Rent collection and arrears management for both tenants
- VCAT representation if needed
Typical rental income for granny flats:
- 30m² studio (1-bed): $340–$360/week base, or $370–$390/week bills-included
- 60m² unit (2-bed): $480–$500/week base
Combined property income example:
- Main house: $600/week
- 30m² granny flat: $380/week (bills-included)
- Total: $980/week ($50,960/year)
- Management fee at 6.90% + GST: ~$3,866/year
- Net to landlord: ~$47,094/year
Bills Strategy — Include Bills in Rent
Never install a separate water/electricity meter for a granny flat. An independent meter costs $20,000–$30,000 AND doubles your council rate bills.
The smart approach — sub-meter + bills-included rent:
Install an internal sub-meter: $500–$1,000. This divides usage between main house and granny flat but is not a legally independent meter. The landlord remains responsible for all utility bills.
How it works:
- Set rent as "bills-included" — e.g., $340 base + $30–$35 utilities = $370–$390/week
- Sub-meter tracks granny flat usage for your records
- You pay all bills from the main account
- The $30–$35/week utility charge covers typical granny flat usage
The numbers:
- Annual utility cost for 30m² granny flat: ~$1,500–$1,800
- Annual utility income from tenant ($30/week): ~$1,560
- Approximate break-even — with bills built into the rent price
90% of successful dual-tenancy properties use this strategy. It simplifies billing, avoids the massive meter installation cost, and provides a clean rental figure for tenant applications.
Important: Establish clear house rules for high-power appliances (space heaters, crypto mining rigs). Include reasonable usage expectations in the lease agreement.
Granny Flat Compliance & Safety
A granny flat must meet the same safety and compliance standards as the main house:
Before renting — mandatory requirements:
- Occupancy Certificate (OC) — must be obtained before advertising
- Electrical safety check: $600 + GST
- Gas safety check (if gas connected): $250
- Smoke alarm inspection: $250
- Total safety compliance budget: ~$2,000
Ongoing compliance (same schedule as main house):
- Electrical check: Every 24 months
- Gas check: Every 24 months
- Smoke alarms: Every 12 months
Minimum rental standards apply to granny flats too:
- Fixed heating in living area
- Hot and cold water in kitchen and bathroom
- Functional ventilation (extractor fan or openable window)
- Window coverings for privacy
- Keyed external door locks
Granny flat construction specifications (what to expect from a quality build):
- Foundation: Concrete slab (excellent for termite/moisture prevention)
- Framing: Treated pine timber (H2/H3 protection)
- Exterior: Fibre cement weatherboard (James Hardie Linea recommended)
- Flooring: SPC stone-plastic (waterproof, durable)
- Windows: Aluminium frame, double-glazed (6-star energy rating)
- Doors: Solid core (security-focused)
Boundary fencing: Colorbond fence between main house and granny flat is strongly recommended (~$150/metre). It provides tenant privacy and defines maintenance responsibility areas.