Convert existing house to GF & build new house at back

I own a property in the Blacktown council area in Sydney (land area ~ 600 sqm), that has an old fibro 2-bedder house on it. The existing house has an internal area of approx 61.5 sqm. This house is located well towards the front of the block of land, leaving a rather large backyard, and plenty of side access all the way to the back fence.

I've checked with 2 separate GF building companies who say that the site is perfectly suitable for building a traditional GF at the back (no easement, no sewer, land gently sloping to front, 17sqm frontage etc).

However, if I "shave off" 1.5 sqm of built area of the old house - e.g. I could move the laundry door back by 1 m - which would bring the total built area down to 60 sqm - then, can I build a "proper house" at the back? (And classify the existing house as a GF)

My intention would be to build something like a "large GF" say 80-90 sqm with 3 beds-2 bath and a single garage, at the back where the traditional GF would've gone. This will probably add about 20-30% to the total cost of building a traditional GF, but the additional rent and depreciation benefits would easily outweigh that in the long run.
(Time is not a constraint for me, happy to do this over 6/12/18 months)

Any advice appreciated!

 

Not sure of the regs re: having the granny at the front but my preference would be to shave the front house down (seeing there's no potential to make it a 3 bedder under the roofline) and build a larger dwelling in the rear. Have to do the sums though to see if its worth it.

 

You would definitely need to speak to the council however I have come across granny flats in front of the main dwelling in Blacktown Council.

If you look up 18 Doctor Lawson on Google maps street view you will be able to see a granny flat in the front yard (I believe it may be number 17 however Google maps street view jumps from 14 to 18)