Last updated October 2026
Modular homes in Melbourne and fixed, site-built granny flats can both deliver a comfortable second home in your backyard. The right choice depends on your block, your access, the finishes you want and how much flexibility you need in the design. This guide compares the two in plain terms so you can decide which approach suits your property.
Key takeaways
- Both modular and site-built granny flats must follow the same Victorian small second dwelling rules.
- A building permit is required for either option.
- Modular homes need clear access for transport and lifting, so site access often decides the choice.
- Site-built homes can usually be shaped more freely around the block.
- Compare finishes, inclusions and warranty in writing, whichever method you choose.
What are modular homes?
Modular homes are built in sections, or modules, inside a factory. The finished modules are transported to your property and placed on prepared footings, then joined and connected to services. Some arrive largely finished inside, while others need more work once they are on site.
A fixed or site-built granny flat is constructed on your block, from the footings up. The frame, roof, cladding and interior are put together in place.
Our prefabricated granny flats guide covers factory-built options in more detail.
Approvals: the same rules apply
The construction method does not change the planning rules. In Victoria, a small second dwelling must:
- have a floor area of 80m² or less From 15 October 2026, the maximum size of a small second dwelling increased from 60m² to 80m² under Amendment VC306. Read our guide to the 80m2 granny flat rules in Victoria (link to https://innovistagroup.com.au/80m2-granny-flat-victoria/).
- include a kitchen, bathroom and toilet
- sit on the same lot as an existing home
- not be subdivided or sold separately
- not be connected to reticulated gas
In most residential zones it does not need a planning permit, although lots under 300m² and some overlays (such as heritage, bushfire or flood) may need one. A building permit is required in every case. The Victorian Government small second dwellings page sets out the official rules, and our guide to granny flat approvals in Victoria walks through the process.
Both options also need to meet the building regulations, including Victoria’s energy efficiency requirements. Read our guide to the 7-star energy rating for granny flats.
Modular homes in Melbourne vs fixed granny flats
| Factor | Modular home | Fixed (site-built) granny flat |
|---|---|---|
| Where it is built | Mostly in a factory | On your block |
| Planning and building rules | Same small second dwelling rules | Same small second dwelling rules |
| Site access | Needs room for a truck and crane | Standard access for trades and materials |
| Design flexibility | Limited by module sizes and transport | Can be shaped around the block |
| Finishes | Set by the manufacturer’s range | Chosen from the builder’s range |
| Site works | Footings, services and joining | Footings, services and full construction |
| Warranty | Check manufacturer and installer terms | Check builder terms |
Transport and site access for modular homes in Melbourne
Site access is often the deciding factor. Modules travel by truck and are usually lifted into place by crane, so you need to check:
- the width and clearance of your side access or driveway
- overhead power lines and trees
- space to park and operate a crane
- street restrictions or permits for oversized loads
Narrow suburban blocks, tight laneways and backyards behind an existing home can make delivery difficult. A site-built granny flat needs access for trades and materials, but not for large finished sections. See what makes a block suitable for a granny flat for the other site factors worth checking.
Design flexibility
Modules are sized to fit on a truck and travel on public roads, so layouts tend to follow those dimensions. That can suit a regular, open block well.
A site-built granny flat can be planned more freely around corners, slopes, easements, trees and setbacks. If your block is irregular or tight, that flexibility can make it easier to fit a well-planned 60m² home. Our granny flat designs for Melbourne show how different layouts suit different blocks.
Finishes and inclusions
Finishes vary widely across both options. Rather than comparing construction methods, compare the actual specifications:
- benchtop material and thickness
- flooring type
- window glazing and frames
- heating and cooling
- appliance brands
- what is included for decking, steps and service connections
Ask for every item in writing. Our full list of granny flat inclusions in Melbourne shows the level of detail to look for.
Warranty and responsibility
With modular homes in Melbourne, more than one business may be involved: a manufacturer that builds the modules and an installer or builder that completes the site work. Find out who is responsible for each part of the job and what each warranty covers.
With a site-built granny flat, one builder is usually responsible from footings to handover. Whichever option you choose, check registration and Home Warranty insurance. Our guide to finding local granny flat builders near me explains how.
Services and site costs
Both options need connections for water, sewer, stormwater and power. The distance from the main house, the slope of the block and your soil type all affect site costs. Read about services connection costs beyond 10 metres to understand what can add to a quote.
The turnkey G-Flat™
The standard G-Flat™ is a 60m², two bedroom turnkey build with a fixed price for each finish level, delivered in approximately 5 months end to end.
| Finish level | Turnkey price |
|---|---|
| Affordable Lite | $195,000 |
| Affordable | $208,000 |
| Homestead | $218,000 |
| Signature | $238,000 |
| Luxe | $265,000 |
Prices are a guide for a standard 60m², two bedroom G-Flat™ and depend on your site. Sites 70km or more from the Melbourne CBD attract a 12.5% regional surcharge, sites with no driveway or tight backyard access attract a $7,000 surcharge, and sloping or elevated sites can affect the final price. A free site assessment confirms the price for your block.
The price includes the building permit and all required reports, all plans, connection of services up to 10m from the main house, stone benchtops, double-glazed windows, a reverse cycle split system and a 10-year structural warranty. See our granny flat pricing guide for Victoria for more detail.
Frequently asked questions
Do modular homes in Melbourne need a building permit?
Yes. A building permit is required for every small second dwelling in Victoria, whatever the construction method.
Is a modular granny flat limited to 80m²?
Yes, to be treated as a small second dwelling it must be 80m² or less, the same as a site-built home.
Can a modular home fit in any backyard?
It depends on your site. Modules need truck and crane access, so check side access, power lines and trees first.
Which option is right for my block?
It depends on access, layout and the finishes you want. A site assessment helps you decide.
Find the right fit for your block
Book your free site assessment or visit our display G-Flat™.