For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Granny Flats

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GUEST OBSERVATION
A “granny flat agreement” is an informal arrangement between a parent and their adult child or children. The parent (often elderly) contributes funds to create granny flat accommodation either by modifying a home or by buying a suitable property in the name of the children. In return they agree to provide the parent with a lifetime right to live in the granny flat, or at least until the parent needs residential care.
Many of these arrangements work out well. The older person then enjoys the love and support of having their family close by as they age.
When an arrangement of this kind goes wrong, however, it can seriously threaten the wealth, autonomy and dignity of the elderly parent. If the relationship between the parent and child, or child’s spouse, breaks down and the parent is asked to leave the property, he or she may be left with nothing.
How does the law treat granny flats?
The parent’s only chance of recovering her contribution is to go to court. These court cases depend on applying a complex set of rules.
The parent must prove the contribution was not a gift but that they supplied funds as part of an arrangement that the parties would live together. Agreements creating interests in land need to be <a href="https://www.legislation.nsw.gov.au/#/view/act/1919/6/part4/div1/sec54a" target="_blank">in writing</a>, and usually there is no written agreement.
The court can apply <a href="https://www.translegal.com/legal-english-dictionary/equitable-principle" target="_blank">equitable principles</a>. A parent who contributed to improving the property ought to have the contributions back, or a proportionate share of the property returned if the arrangement ends prematurely, because it is unjust for children to retain the benefit of the contribution without providing the granny flat.
Where the court finds that the parent relied on a promise by the child that the parent would have an interest in the house, or at least a right to live with the child for life, the child can be required to repay the contribution.
This often means the child must sell their house if they cannot refinance to obtain the money to pay the parent. If the parent is entitled to a share of the property, the house has to be sold to realise the parent’s share.
The problem for parents is that court cases cost money, unless Legal Aid is available, but only parents who are truly destitute qualify for assistance. The parent has to produce evidence of the arrangement or the promise. They often have to recount conversations from many years ago to prove there was an arrangement. The children have to spend money on their own lawyers.
Parents and children very rarely put these agreements in writing and almost never consult a lawyer. Sometimes, to help the child get finance, a parent may have told the lender the contribution was a gift.
All this makes court cases complex, difficult and expensive.
In New South Wales, the <a href="https://www.propertyobserver.com.au/https://www.legislation.nsw.gov.au/%7E/view/act/1984/147" target="_blank">Property (Relationships) Act 1984</a> may apply to granny flat disputes, but the parent still has to show how they contributed to the child’s property. Other states and territories – including <a href="http://classic.austlii.edu.au/au/legis/vic/consol_act/ra2008173/" target="_blank">Victoria</a>, <a href="https://www.legislation.sa.gov.au/LZ/C/A/DOMESTIC%20PARTNERS%20PROPERTY%20ACT%201996/CURRENT/1996.51.AUTH.PDF" target="_blank">South Australia</a>, <a href="http://www7.austlii.edu.au/cgi-bin/viewdb/au/legis/tas/consol_act/ra2003173/" target="_blank">Tasmania</a> and <a href="http://www7.austlii.edu.au/cgi-bin/viewdb/au/legis/act/consol_act/dra1994253/" target="_blank">ACT</a> – have similar laws for couples, which might apply to family arrangements. However, the NSW legislation is broader, which makes things worse for parents outside NSW.
When a dispute arises, the parties usually want to resolve the matter as quickly and as cheaply as possible. But court cases can take a year or more to get to hearing. Affidavits must be prepared and financial documents reviewed. During this time the parent may be living in emergency housing, often at public expense.
The picture gets worse if the child’s marriage breaks down. The parent’s claim then gets taken into family property proceedings between the child and their spouse in the Family Court or Federal Circuit Court. This can take even longer than going to the Supreme Court.
A better way to resolve disputes
Parties to these disputes need fast access to a system of practical rules for separating the parties’ property interests, and one that offers early mediation. These rules would cover factors such as increases in the value of the property, how long the parties lived together, what benefits they received, and other discretionary considerations. Such rules might provide the basis for a set of statutory guidelines for a tribunal to apply.
Civil and administrative tribunals <a href="http://www.ncat.nsw.gov.au/Pages/going_to_the_tribunal/going_to_the_tribunal.aspx" target="_blank">emphasise informality and conciliation</a>, so giving these tribunals jurisdiction to resolve granny flat disputes according to statutory guidelines would arguably be more efficient than going to the Supreme Court or Family Court.
Parties really should seek legal advice on granny flat arrangements before they commit to the deal. But parents often trust their children and are optimistic that they can live together as a family. If a lawyer provides advice to an elderly parent individually and with an awareness of their client’s possible incapacity or vulnerability to undue influence, that gives all parties a chance to decide what they want to happen if the relationship breaks down.
Centrelink <a href="https://www.smh.com.au/money/how-to-give-property-to-your-kids-and-keep-the-age-pension-20151118-gl1ypg" target="_blank">recognises granny flat arrangements</a>, so parents’ contributions are not automatically <a href="https://www.humanservices.gov.au/individuals/enablers/gifting" target="_blank">treated as a gift</a>. Gifting attracts an asset test under which the parent might be deemed still to have the funds contributed, which could reduce their pension.
The children can also be worse off if the Tax Office considers that the child accepting the contribution made a capital gain because the parents’ contribution increased the value of the home.
Although the Australian Law Reform Commission has <a href="https://www.alrc.gov.au/publications/elder-abuse-report" target="_blank">looked at some aspects of this issue</a>, action is need to reduce the complexity of existing equitable and statutory rules. Elderly parents should not have to take their children to court in expensive legal proceedings to retrieve the contribution that was meant to ensure they had a secure home in their later years.
Patricia Lane, Senior Lecturer, University of Sydney
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/when-granny-flats-go-wrong-perils-for-parents-highlight-need-for-law-reform-103335" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

When granny flats go wrong – perils for parents highlight need for law reform

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There have been a few recent changes to the NSW affordable housing state environmental planning policies (SEPP or AHSEPP).  This policy was introduced in July 2009 to increase the supply of affordable rental and social housing in NSW.
Since then, Property Bloom has been busy doing our bit to help with affordable rental properties in the Hunter region of NSW. 
A typical, new two bedroom granny flat or single villa will rent for just $250 - $280 per week.  Compared to a typical house in these locations, tenants can save around $50 a week and these are pretty good digs being offered and in some cases much better than the 80 year old miner’s cottages asking for higher rents. 
The flats meet all the<a href="https://www.basix.nsw.gov.au/basixcms/about-basix/basix-assessment/basix-certificates" target="_blank"> Basix requirements</a>, which means they are energy efficient. They are functional and about the same size of some of the miner’s cottages but of course being brand new have none of the issues of older homes.  
 <img src="/images/2014/05/02/chivers%20may%201%20two.jpg" alt="">
 <img src="/images/2014/05/02/chivers%20may%201%20one.jpg" alt="">
On the 14 February 2014 there were some new changes introduced to the AHSEPP.  Probably the most important was the change to the period in time the complying development assessment can take.
Previously it was 10 days and it has now been extended to 20 days. This is because the neighbours now need to be notified of the application to build a granny flat.
In the past, the neighbours were not notified and may have realised all too late that granny was coming to their close proximity.  Neighbours of the complying development now get to know what’s going on next door - which I think is a good thing.
They have 14 days to lodge any complaints or ask any questions of the certifier. They can’t really stop a granny flat being built unless the application is not meeting all the requirements of the policy; however they have the opportunity to discuss any concerns and check plans. I think this is fair and it’s always good to have some kind of relationship with your neighbours. 
Imagine you live in a high density area where the land size is quite small; say 450-500 square metres blocks and the house next door starts to build a granny flat. There is not a lot of space for the tenants of the flat to chill out so they hang right on your fence line when they have a BBQ which happens to be next to your bedroom window. This is not a good situation for anyone.
Property Bloom always looks for large lot sizes for our granny flat developments, land that is 800 square metres – 1,000 square metres so there is plenty of yard space for both the house and the flat.  This is one of our main criteria but we have a long list of other criteria that we need to meet before we will present a property to our clients for such a development.  Our goal is to maximise the rent from the house and the flat but if the positioning of the flat is too close to the house, it just won’t work.
When you get it right, this strategy works well but I’ve heard of some horror stories where investors have just squeezed on a flat, yet still meeting the AHSEPP requirements but not thinking about the consequences; unhappy neighbours, and unhappy tenants.   
For a granny flat development to work for property investors it needs to result in a high rental yield, be well designed so that there are no issues down the track and maximise depreciation benefits of the property. 
Check out the video here where we explain <a href="https://www.propertybloom.com.au/services/granny-flats" target="_blank">some of the pros and cons of building a granny flat</a>.
<a href="https://www.propertybloom.com.au/" target="_blank">www.propertybloom.com.au</a>
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jochivers-wq5Bp59R5a

Granny meets the neighbours

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If there’s one thing which this country doesn’t have a shortage of it is property schemes and ‘gurus’ who promote these schemes to the vulnerable property investor. The defence housing scheme and National Rental Affordable Scheme (NRAS) now has competition from another scheme.
This scheme is sweeping places such as Sydney, Adelaide, Perth and Ipswich. It’s the granny flat (yes, the granny flat!); the next epidemic that will give plenty of property owners grey hair.
The logic of the granny flat goes like this: “Pick an area where the local government zoning permits granny flats, buy a house, spend $100,000 to build a granny flat on it, rent out both properties, and bring in a double-rent bonanza!”
Clever, right? Wrong!
I see it a lot where property investors get caught up in the higher than normal rental return of a property at the expense of the ultimate potential for capital growth. Don’t get me wrong, the rental income has importance however let’s not lose sight of why we are actually investing. For a majority of people, they invest so that one day they will have the financial freedom to exit the workforce with an income stream that will give them a significantly better lifestyle than they’d get on a taxpayer-funded pension.
At first glance, you’d think a granny flat with its capacity to bring in more rent from one property would be the perfect way to ratchet up those retirement funds. How close will you be to retiring by owning a property that is cash flow positive to the tune of (say) $2,000 per annum? How many granny flat properties will you need to acquire in order to sail the Bahamas? And, how will you fund future dual-living duds like this?
Sure, the granny flat property will grow in value over the years, but its growth will be directly influenced by the buyer demand for it. And this is where the rubber really hits the road.
Think about this scenario logically: who wants to buy a granny flat property? It has to be a buyer who doesn’t mind someone else living in their backyard and the various annoying behavioral traits of each new tenant. That buyer probably is not a young family, a baby boomer, or a young professional couple.
Most often, granny flat properties only appeal to investors. The number of owner-occupiers choosing a granny flat property over any other more conventional home is minuscule. According to the latest Census data, only 25% of all properties are investor-owned. So, to invest in a granny flat property is to sink a heap of money in to an asset with a very small basket of future buyers and to ignore the much bigger basket brimming with first home buyers, renovators, upgraders, downsizers and investors (75% of the market actually)!
Granny flats fall under Propertyology’s category of ‘specialised properties’: properties which only appeal to a very select population segment. These properties have lower demand than a more conventional property.
There’s been a rise in the number of property valuers not supporting purchase prices for properties with a granny flat. Spending $100,000 to build a granny flat on an existing detached house block rarely adds an extra $100,000 in value. Why? Because granny flats aren’t pretty and there are far less teetotalers than willing grannies (buyers).
There is a growing number of ‘property consulting’ companies out there spruiking new houses with granny flats on them to investors. With the gift of the gab and more glossy brochures than you can poke a stick at, these are often the same ‘consultants’ who ran out of NRAS stock and / or are suddenly struggling to make a buck from selling defence housing.
The extra rental income isn’t everything that’s it made out to be either. There is often a longer vacancy period between tenants because a lot of people are turned off at the thought of having a stranger live in their backyard. And those tenants who are interested will demand a lower rent. Property management and letting fees will be applicable to each dwelling and there is increased potential for tenant conflicts.
Banks have a more conservative credit policy for granny flats. When assessing a borrower’s affordability banks will often significantly discount the potential rental income. They often will also limit the amount that they will lend against granny flat properties. Think about why banks would do this.
If you are still um-ing and ar-ing about whether the cash flow positive granny flat is an ideal strategy for stopping work one day, think about this:
Property investor ‘A’ and property investor ‘B’ both have $500,000 to spend. Investor ‘A’ spends his money on a specialised property while investor ‘B’ spends hers on a conventional property. 10 years pass and the conventional property has grown in value in line with the broader Australian market at 6% a year and will then be worth $895,000. The smaller buyer pool for the specialised property has resulted in an increase in value by 4% a year for an end value of $740,000. It’s not rocket science figuring out which property will make a bigger contribution to that retirement nest egg.
On the surface, the dual rental income creates an allure that granny has become youthful again. But, take off the rose-coloured glasses and you’ll discover that, beneath all that botox and bottled-blonde hair is the genuine granny. My advice: keep your granny, but ditch the granny flat. It’ll save you years of grey hair!
Simon Pressley is managing director of <a href="https://www.propertyology.com.au/" target="_blank">Propertyology</a>, a full-time property market analyst, accredited property investment adviser, and the REIA's Buyer’s Agent of the Year (2012 and 2013).
                                     
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spressley-sBoeMhannA

Keep granny, ditch the flat

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Legislative changes, house price and rental demand increases, in conjunction with a housing affordability crisis, have apparently prompted the creation of Granny Flat Finder, a tech start-up that is filling the niche of granny flat developments.
Ever since the changes in New South Wales allowed investors to achieve dual income by building a granny flat on applicable blocks, there has been substantial interest in the strategy. Most recently, ACT has updated their legislation, <a href="https://www.propertyobserver.com.au/australian-capital-territory/granny-flat-size-allowance-increased-in-act/2014021067684" target="_blank">allowing granny flats to be larger and more appropriate as rentals</a>.
Since trading in December 2013, <a href="https://www.grannyflatfinder.com.au/" target="_blank">Granny Flat Finder</a>, a marketplace for investors to locate builders and designs, has listed over 50 builders covering 15% of the market, and is receiving 1,200 views per day.
Director of Granny Flat Finder Pty Ltd, Jay Wright, built the site to task all the hassle out of options and the complicated laws and processes. “[Our] research had suggested this was a growing market, however the demand has been unprecedented. This week alone we have had over 100 enquiries submitted to builders through the website from customers looking to have a granny flat built,” said Wright.
Designs can be filtered in terms of one, two and three bedroom designs, and builders have online profiles in a classified-style collection.
The website also provides white papers, guides, tips and legislation.
The January report of the site saw 3,000 views on Granny Flat Finder, 16,000 views of designs and builder profiles and 217 customers enquiring.
For your interest: <a href="https://www.propertyobserver.com.au/renovating/the-four-pros-and-four-cons-of-building-a-granny-flat/2013082564469" target="_blank">Four pros and cons of building a granny flat</a><a href="https://www.propertyobserver.com.au/renovating/the-four-pros-and-four-cons-of-building-a-granny-flat/2013082564469" target="_blank"></a>
<a href="mailto:jduke@propertyobserver.com.au" target="_blank">jduke@propertyobserver.com.au</a>
                       
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jduke-EHk3XBmHkn

Granny flat demand at record levels, prompting online start-up “Granny Flat Finder”

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Hi Margaret, 
 We own a five acre block near Darwin with a four-bedroom house under renovation. 
 My hubby is a 65 year-old self-employed tradesman and as we are not overly endowed with super, had the idea that if he built a small residence (granny flat) on same block with separate power, water etc, we could base ourselves there and rent out the main dwelling for income.
We would also caretake the block, e.g. mow lawns, remove palm frond,s etc. (There are a lot of properties this size in this area which build granny flats /dependant units and rent those out seemingly with no trouble planning-wise it seems.) We can’t subdivide five acres here. 
 Can you please advise if our idea is even feasible tax wise before we look into it further? I realise it is a pretty broad query! 
 Many thanks, 
 Jane 
 
Dear Jane,
This is an interesting question and one which is not often asked, and so I referred to Julia Hartman, a great expert on these more obscure scenarios.
She has said that there are many things to consider, the main one being the capital gains tax exemption for your principal place of residence. Once the granny flat is built, if you moved into it immediately, then from a tax point of view this would be treated as two separate properties. Once you rent out the former family home, the cost base of that property is considered to be the market value at the time. The granny flat and the land underneath it would also be given a market value.
At this point you would have to choose which one you wanted covered by the main residence capital gains tax (CGT) exemption – and ahead of time it can be really hard to work out which of the two is likely to have the greatest amount of growth.  If you choose the former family home to have the exemption, then the granny flat and its land will have CGT from its determined market value, and if you choose the granny flat, then the family home will attract CGT from the market value established upon you moving out.
If you don’t want  the property to be treated like two separate assets,  then you need to live in both the granny flat and the house, combined as your home, for the first three months at least.  This way, the two houses are seen as one dwelling,  and for CGT purposes the treatment would be just the same as if you were renting out rooms or part of your home.  This of course exposes the whole property to CGT from the market value of the whole property at the time the granny flat is built, but only for the portion of the home which was rented out – and so it’s done on a pro rata basis.
As you can see – its complex! It’s going to be really hard to actually work out which pathway is the best one to take, since you can’t really estimate future values.  Make sure that you have an accountant who can help you work out some ballpark figures and don’t make any decisions until you have a clear understanding of what could potentially happen in the future.
Regards,
Margaret.
<hr>
Margaret Lomas is a best-selling author and writes and hosts the popular Property Success With Margaret Lomas and heads up the panel on Your Money, Your Call, both on Sky News.
She is the founder of <a href="https://destiny.com.au/dotnetnuke/en-au/home.aspx" target="_blank" rel="nofollow">Destiny</a>.
Have a property question? <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
 
 
 
 
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