House with detached Granny in Flat Victoria

Discussion in 'Loans & Mortgage Brokers' started by Carol M, 9th Jun, 2022.

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  1. Carol M

    Carol M Well-Known Member

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    3rd Jun, 2018
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    Location:
    Newcastle NSW
    Need advice please on Victorian laws re Granny Flats. Am keen to buy an investment property that contains a detached Granny Flat (a Dependant Persons Unit in Victorian parlance). I am aware council (Yarra Ranges) requires a dependant person to live there, but hope to rent it to a tenant who has a dependant living there - either a real granny, or maybe teenager etc?
    How will lenders view this. Other option is to rip out oven, or entire kitchen, but not sure if would need to put in a change of use and call it a Studio (which may open a tin of worms re compliance etc, as would converting it to a Dual Occupancy I suspect).
    Or maybe it can be viewed by both council and bank as outbuilding. Thoughts please?
     
    Carol M, 9th Jun, 2022
    #1
  2. thatbum

    thatbum Well-Known Member

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    Wouldn't it just be on one lease then? So what would be the problem?
     
    thatbum, 9th Jun, 2022
    #2
    craigc likes this.
  3. Lindsay_W

    Lindsay_W Well-Known Member

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    This is not a lending issue.

    As normal, a house with a detached Granny Flat

    If the GF is council approved then no issue, if not council approved then some lenders won't allow the rental income from the GF to be used towards serviceability calcs. They're not going to advise you to tear it down/take the kitchen out/convert to studio or anything like that.
     
    Lindsay_W, 10th Jun, 2022
    #3
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    You sound like you understand state laws. It could be attractive to a family eg older parent, teen but not not necessarily command higher rent but a family with specific needs may find it well worth renting v elsewhere. You will need to make sure a tenant doesnt try to sublet it etc through a special condition.
     
    Paul@PAS, 10th Jun, 2022
    #4