Last updated October 2026
The granny flat boom in Melbourne is largely the result of simpler rules. Since December 2023, most Victorian homeowners have been able to build a small second home in the backyard without a planning permit, and from 15 October 2026 the size limit increased from 60m² to 80m². Add families looking for ways to live closer together, ongoing pressure on housing, and the flexibility of a second home on land you already own, and it is easy to see why more people are asking about granny flats. This guide explains what changed, why it matters and what to check before you build.
Key takeaways
- Victoria’s small second dwelling reforms took effect on 14 December 2023 and removed the planning permit for most sites.
- A small second dwelling can be up to 80m², must have a kitchen, bathroom and toilet, and needs a building permit. 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/).
- Anyone can live in one, including family, a dependent relative or a tenant, but it cannot be sold separately.
- Families are using granny flats for ageing parents, adult children and flexible living.
- A free site assessment tells you whether your block suits a second home.
What changed in Victoria
Before the reforms, Victoria’s planning rules used the term dependent person’s unit (DPU) for this kind of backyard home. The Victorian Government describes a DPU as a movable building on the same lot as an existing home, used to house a person who depends on a resident of the main house. That narrow definition limited who could live in it and how homeowners could use it.
On 14 December 2023, planning amendment VC253 and new building regulations introduced the small second dwelling. In most cases where there are no flooding, environmental or other special planning controls, a small second home no longer needs a planning permit. A building permit is still required, and it must meet siting, amenity, design and safety requirements.
The Victorian Government small second dwellings page sets out the full rules. Our guide to small second homes in Victoria explains them in plain English.
The rules at a glance
| Rule | What it means |
|---|---|
| Size | 80m² floor area or less |
| Facilities | Must have a kitchen, bathroom and toilet |
| Location | Same lot as an existing home |
| Planning permit | Not needed in most residential zones; lots under 300m² and some overlays may need one |
| Building permit | Always required |
| Sale | Cannot be subdivided or sold separately |
| Gas | Cannot connect to reticulated gas |
| Parking | No extra car park required |
| Renting | Allowed, and residential tenancy laws apply |
For a step by step look at the process, read granny flat approvals in Victoria.
Why the granny flat boom in Melbourne is happening
The reforms opened the door, but people walk through it for their own reasons. These are the main drivers behind the granny flat boom in Melbourne.
1. A simpler approval path
For most suburban blocks, removing the planning permit takes a step out of the process. Homeowners still need a building permit and must meet the siting and design standards, but the path is clearer than it was under the DPU rules. That makes projects easier to plan.
2. Multigenerational living
Many Melbourne families want to stay close without sharing every room. A granny flat gives an ageing parent their own front door while keeping family nearby. It also suits adult children saving for their first home, or a carer who needs to be close at hand. Read multi-gen living made easy and granny flat layouts for elderly parents for ideas.
3. Housing pressure
Housing supply and affordability are a live issue across Victoria. The state’s Housing Statement sets a target to build 800,000 homes in Victoria over the next decade, and the Victorian Government says the small second dwelling changes aim to give families more housing choice and boost housing supply. A granny flat adds a home on land that already has services, roads and transport nearby.
4. Flexibility over time
Because anyone can now live in a small second dwelling, its use can change as your life does. It might house a parent today, an adult child in a few years and a tenant after that. Some homeowners even move into the granny flat themselves and let family use the main house. Our guide on downsizing to a granny flat looks at that option.
Who is building granny flats?
There is no single type of owner behind the granny flat boom in Melbourne. Common reasons we hear include:
- Families caring for parents: a private, self-contained home close to support.
- Parents of adult children: independence for young adults who are not ready to buy.
- Homeowners planning ahead: a flexible space for future family needs.
- Owners thinking about renting: a second home that can be leased under residential tenancy laws.
If renting is part of your plan, rents vary by suburb, finish and demand, and a local property manager can give you a rental appraisal. See how to legally rent out a granny flat in Victoria for the rules landlords must follow.
What to check before you join the granny flat boom in Melbourne
Interest in granny flats is high, but every block is different. Before you commit, check:
- Lot size: blocks under 300m² usually need a planning permit.
- Overlays: heritage, bushfire or flood overlays may add requirements.
- Easements and covenants: these can limit where or whether you can build.
- Access: builders need a way into the backyard.
- Services: water, sewer and power need to reach the new home.
- Setbacks: the building permit assesses siting against the standards.
Our guides to what makes a block suitable for a granny flat and council requirements by suburb go into more detail. When in doubt, check with your council.
What a G-Flat™ offers under the new rules
The standard Innovista G-Flat™ is a 60m², two bedroom turnkey home with five floor plans to suit different blocks, and all plans cost the same within a finish level. G-Flat™ designs can be customised to a degree, so a larger layout under the new 80m² limit can be discussed at your site assessment.
| 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.
Every G-Flat™ 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 with a 6-month maintenance guarantee. See the full list of granny flat inclusions in Melbourne and compare layouts in granny flat designs Melbourne 2026.
A G-Flat™ takes approximately 5 months end to end, from planning through to handover.
Is a granny flat right for you?
A granny flat tends to suit you if you have enough backyard space, good access and a clear use in mind, now or later. It may not suit you if your block is small or heavily constrained, or if you would rather keep the yard open. Our complete guide to granny flats in Melbourne is a good place to start.
Frequently asked questions
Why are granny flats so popular in Melbourne?
Victoria removed the planning permit for most small second dwellings in December 2023. Families also value the flexibility of a second home for parents, adult children or tenants.
Do I need a planning permit for a granny flat in Victoria?
Not in most residential zones. Lots under 300m² and some overlays may need one, and a building permit is always required.
Can anyone live in a granny flat now?
Yes. Family, a dependent relative or an unrelated tenant can live in a small second dwelling, and tenancy laws apply if you rent it out.
Can I sell my granny flat separately?
No. A small second dwelling cannot be subdivided or sold separately from the main home.
Find out what your block can do
The easiest way to see whether a granny flat suits your plans is to have your site checked and see a finished home in person. Book your free site assessment or visit our display G-Flat™.