Granny Flat Rules in NSW Secondary Dwellings

What it is

A granny flat in NSW is legally a secondary dwelling. The State Environmental Planning Policy (Housing) 2021 defines a secondary dwelling as a self-contained dwelling that is on the same lot as a principal dwelling and is either inside, attached to, or detached from the principal dwelling.

Secondary dwellings sit in the planning system as a separate use class from dual occupancy. Only one principal dwelling and one secondary dwelling are allowed per lot. A secondary dwelling cannot be subdivided off the principal lot, which is the central difference between a granny flat and a detached dual occupancy.

Where they are permitted

Under the Housing SEPP, secondary dwellings are a permitted use in every R1 General Residential, R2 Low Density Residential, R3 Medium Density Residential, R4 High Density Residential and R5 Large Lot Residential zone across NSW. Councils cannot prohibit secondary dwellings in these zones even where the local LEP does not list them.

The principal dwelling must already exist or be approved at the same time. A standalone secondary dwelling on a vacant lot is not allowed under the Housing SEPP.

Lot size requirements

The Housing SEPP sets a minimum lot size of 450 sqm for a secondary dwelling. Councils may set a higher minimum in their LEP but the SEPP overrides any lower threshold. In practice, secondary dwellings are achievable on most suburban Sydney lots which typically sit at 500 sqm or larger.

Size cap

The Housing SEPP caps the floor area of a secondary dwelling at 60 sqm. The 60 sqm includes all habitable and non-habitable interior space within the building envelope. It does not include:

• Verandahs and balconies designed to the SEPP standards.
• Carports and garages built in accordance with the SEPP carport provisions.
• External storage that is not habitable.

A handful of councils permit larger secondary dwellings under their LEPs. For example, certain semi-rural lots in Hawkesbury and Hornsby allow 75 or 90 sqm depending on lot size, but the SEPP 60 sqm rule applies as the default everywhere else.

Design and amenity standards

The Housing SEPP carries development standards covering setback, height, site coverage and private open space. The maximum height is generally 8.5m to the top of the roof. Setbacks usually mirror the principal dwelling's setbacks under the LEP. The SEPP also requires a minimum 24 sqm of private open space for the secondary dwelling.

Approval pathways

A secondary dwelling can be approved in NSW through either a Development Application or a Complying Development Certificate.

Development Application pathway

A DA goes to the council. Council assessment typically takes 40-90 days. The DA pathway is required where the lot does not meet the CDC trigger criteria, where the lot is in a heritage conservation area, or where the lot sits in a flood, bushfire or coastal hazard overlay that excludes complying development.

Complying Development Certificate pathway

The CDC pathway is set out in Chapter 3 of the Housing SEPP for secondary dwellings. A CDC can issue in as little as 20 business days. The lot must:

1. Be a minimum of 450 sqm.
2. Have a minimum width of 12m at the building line.
3. Not be in a heritage area, foreshore area, environmentally sensitive area, or class 5 bushfire-prone land.
4. Have an existing principal dwelling (or one being built under separate consent).

The CDC pathway is the dominant approval route for secondary dwellings in NSW. Industry data suggests over 70 percent of NSW granny flats use the CDC pathway because the timing certainty matters more to homeowners and builders than the small design flexibility a DA can provide.

Build cost and contracting

Most granny flats in NSW are built under a Home Building Act 1989 contract. The contract must be in writing where the value exceeds 5000 dollars and the builder must hold home building compensation insurance under the Home Building Compensation Fund where the value exceeds 20000 dollars.

The contract value sits well above both thresholds for almost every granny flat project. Builders working in this space have to:

• Hold a NSW Fair Trading builder licence appropriate to the value.
• Issue an HBCF certificate before commencing work.
• Use a written contract that complies with section 7 of the Home Building Act 1989.

Common pitfalls

The most common mistake we see is a homeowner buying a kit and beginning installation before approval. The Housing SEPP secondary dwelling provisions only apply where the dwelling is built under either a CDC or DA consent. A kit installed without approval is an unauthorised building and the council can issue an order for demolition under section 9.34 of the Environmental Planning and Assessment Act 1979.

The second common issue is the 60 sqm cap. Builders sometimes design a 65 sqm or 70 sqm dwelling assuming the council will tolerate a small overrun. The certifier will refuse the CDC and the only options are to redesign or run a DA, both of which add months to the program.