Matthew McCabe, Aged Care Specialist Financial Planner
Following on from my article last fortnight on “downsizing”, this week we look at Granny Flats. Many home owners are now opting to construct brand new granny flats. In some cases it can be cheaper to create a new building, as it does not interfere with the structure of the house.
Where can granny flats be built?
Granny flats can be built on most residential-zoned properties, but it is best to check with your local council in case there are some restrictions that may prevent you from constructing one on your particular block. The best way to do this is to purchase a planning certificate from your local council.
Why are granny flats so popular?
For older Australians looking to downsize but stay near family, and those averse to or not ready for retirement living, the granny flat means, as it always has, independence and security. For renovators, a granny flat can be a haven while builders tear things apart, especially given the cost of renting.
Granny flat arrangements (or rights) and the impact on your Age Pension?
Granny flat rights are usually formal or informal family arrangements where an individual transfers money, assets or the title of his/her home to a family member (or other person) in exchange, receives either the right to accommodation for life or a lifetime interest in private accommodation. The individual will not have legal ownership of the property. Normally a transfer of money and/or assets would be assessed by Centrelink under gifting and deprivation rules but special rules apply where a legitimate granny flat right has been established.
Legal advice required
All parties involved in the granny flat right should obtain legal advice. Ian Gray of CDG Law says, “while getting legal advice can be stressful, the consequences of not doing it properly can impact on the rest of your life.”
It is recommended you seek advice from your financial adviser and legal specialist.