Granny Flats have increased by 24.1% in Western Sydney by Anna Mendonca- Marrickivlle Real Estate

A gold mine in your own backyard

Increasing property and rental prices have forced many Australians to start looking for alternative living arrangements. This has caused a surge in demand for secondary dwellings or granny flats.

In response to this demand, data collected from thousands of BMT Tax Depreciation Schedules suggests construction of granny flats has increased by 24.1% in Western Sydney suburbs and 9.3% across Australia over the last two financial years. This dramatic increase in construction can be attributed to state-level legislative changes regarding secondary dwellings, aiming to boost housing affordability in capital city areas.

2009 saw the Affordable Rental Housing – State Environmental Planning Policy (SEPP) come into force in NSW. In August 2013, WA followed suit with its State Planning Policy 3.1 Residential Design Codes. With these legislative changes, NSW and WA join the NT, ACT and TAS in allowing property owners to rent a secondary dwelling to those other than family members or friends.

While renters are often attracted to granny flats for their affordability, many property investors are keen to capitalise on this recent demand for secondary dwellings due to the high rental yields often achieved.

Our data suggests that on average a granny flat will cost $121,000 to construct. Property owners have found that they are usually able to achieve annual rental yields of 15% on this investment.

In order to maximise the benefit of this yield, all granny flat owners should understand their depreciation entitlements.

When a secondary dwelling is income-producing the owner is entitled to substantial deductions, even if they are currently occupying the primary residence on the property. Research conducted by BMT has shown that the average first year depreciation deduction for a granny flat is $5,288, accumulating to $23,713 in deductions over the first five years. Shared areas between the granny flat and owner-occupied property such as patios, pools and barbecues may also entitle the owner to additional depreciation deductions, claimed based on the tenant’s usage percentage.

To understand the viability of using a secondary dwelling as an additional source of income on a particular property, the table below illustrates the differences in regulations between states as well as the first-year depreciation deductions a property investor would be able to claim.

Assumptions and Disclaimer

When evaluating the cash flow potential of a secondary dwelling on your property, we can provide an estimate of the tax depreciation deductions that would become available. Complete this form today and one of our depreciation experts will be in contact.

Sell your property today with Anna Mendonca! 

Anna Mendonca 0433 56 99 33
www.marrickville-realestate.com.au

CONSTRUCTION COSTS IN AUSTRALIA by Anna Mendonca - Marrickville Real Estate

report by BMT contructions

Average Costs of Construction in Australia

The BMT Construction Cost Table is a useful guide to the cost of construction for a variety of building types including, houses, townhouses, residential apartments, office blocks, industrial warehouses, supermarkets, shopping centres, hotels and motels.

Choose your finish then multiply by the regional variations table below to find out the approximate cost per construction type per square metre in your area.

All prices below are quoted exclusive of GST.

Construction Cost Table

Construction Type

Level of Finish

House

Low

Medium

High

3br weatherboard project home, level block, single level,shelf design

$1,035

$1,235

$1,590

3br brick veneer project home, level block, single level, shelf design

$1,065

$1,270

$1,630

3br full brick project home, level block, single level, shelf design

$1,090

$1,305

$1,670

4br weatherboard project home, level block, single level,shelf design

$1,540

$1,715

$1,910

4br brick veneer home, level block, single level, unique design

$1,570

$1,750

$1,950

4br full brick home, level block, single level, unique design

$1,640

$1,810

$2,010

3br brick veneer project home, level block, two level, shelf design

$1,110

$1,310

$1,710

3br full brick project home, level block, two level, shelf design

$1,130

$1,400

$1,790

4br brick veneer home, level block, two level, unique design

$1,700

$1,900

$2,050

4br full brick home, level block, two level, unique design

$1,780

$1,970

$2,250

Architecturally designed executive residence

$2,160

$3,250

$5,050

Townhouse

2br, single level brick veneer townhouse, including allowance for common property

$1,250

$1,490

$1,740

2br, 2 level brick veneer townhouse, including allowance for common property

$1,350

$1,580

$1,900

3br, single level brick veneer townhouse, including allowance for common property

$1,235

$1,475

$1,725

3br, 2 level brick veneer townhouse, including allowance for common property

$1,340

$1,610

$2,270

Units

3 level walk-up unit complex, concrete structure, ground floor parking

$1,650

$1,820

$2,320

3 level walk-up unit complex, concrete structure, basement parking

$1,615

$1,785

$2,285

4-8 level walk-up unit complex, concrete structure, ground floor parking

$1,720

$1,950

$2,650

4-8 level walk-up unit complex, concrete structure, basement parking

$1,650

$1,920

$2,615

8 or more level unit complex, including lift and basement car parking

$1,710

$2,280

$3,030

Commercial

1-4 level open plan offices, including A/C & lifts, excluding fit out

$1,480

$1,760

$2,290

4-8 level open plan offices, including A/C & lifts, excluding fit out

$1,620

$1,850

$2,400

8 levels and over, including A/C & lifts, excluding fit out

$1,880

$2,064

$2,770

Industrial

High Bay Warehouse, standard config, concrete floor, metal clad

$810

$885

$980

High Bay Warehouse, standard config, concrete floor, pre-cast concrete wall clad

$1,050

$1,110

$1,250

Retail

Suburban shopping mall area including A/C

$1,590

$1,810

$2,100

Supermarket, including A/C, excluding fit out

$1,380

$1,500

$1,670

Hotels/Motels

Single level boutique motel, including A/C, guest facilities

$2,650

$3,200

$4,500

Single level tavern/hotel, including A/C, excluding loose item fit out

$1,980

$2,350

$2,650

Regional Variations

Cairns

115 %

130 %

Brisbane

105 %

115 %

Sydney

100 %

100 %

Canberra

96 %

104 %

Melbourne

98 %

108 %

Hobart

87 %

97 %

Adelaide

98 %

110 %

Perth

100 %

120 %

Darwin

110 %

120 %

If your development is not located in Sydney, you can still use these rates as a guide by applying a regional variation percentage. Simply multiply the construction cost by the regional variations opposite. This will give you an approximate cost for the construction type per square metre in your area.

The Calculation of Construction Costs

The above costs are calculated based on a Gross Floor Area (GFA) rate. Typically GFA can be defined as the sum of the fully enclosed covered floor area and the unenclosed covered floor area of a building at all floor levels, measured in a square metre rate. GFA consists of two elements:

• FECA: Fully Enclosed Covered Area
• UCA: Unenclosed Covered Area

FECA: Includes items such as:

Basements
Attics
Garages
Penthouses
Lift shafts
Staircases
Columns and piers

UCA: Includes items such as:

Roofed balconies
Open verandahs
Porches and porticos
Attached covered walkways
Usable space under buildings

Costs provided are an average price for typical buildings as at the date of publication, allowing for preliminaries, builders profit and overheads. Costs can provide no more than a rough guide to the probable cost of building, as costs can vary significantly based on site conditions, level of fitout and design.

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Disclaimer:
The construction cost information above is provided as a general guide to allow you to estimate the potential construction costs for a building type. However, the Cost Information is based on assumptions concerning construction type, quality and condition of inclusions which may differ from your personal circumstances. You acknowledge and agree you must undertake your own analysis and obtain independent construction, legal, financial and taxation advice before using, relying or acting on the Cost Information.

Sell your property today with Anna Mendonca! 

Anna Mendonca 0433 56 99 33 OR 1300 938 931
www.marrickville-realestate.com.au