Last updated October 2026
What is a granny flat? It is a small, self-contained home built on the same block as an existing house, with its own kitchen, bathroom and living space. In Victoria, the planning rules call them small second dwellings, and they come with a clear set of rules. This guide explains what a granny flat is, who uses one, the benefits, the approvals you need and what a build costs.
Key takeaways
- In Victoria, a granny flat is a small second dwelling of 60m² or less on the same lot as an existing home.
- It must include a kitchen, bathroom and toilet, and it cannot be subdivided or sold separately.
- Most residential zones need no planning permit, but a building permit is required for every build.
- Granny flats are used by family, tenants, downsizers and home workers, and the use can change over time.
- A turnkey G-Flat™ costs $198,000 to $265,000, depending on the finish level and your site.
What is a granny flat in Victoria?
The term “granny flat” is used loosely across Australia, but in Victoria the planning rules define a small second dwelling. To qualify, it must:
- have a floor area of 60m² or less
- include a kitchen, bathroom and toilet
- sit on the same lot as an existing home
A small second dwelling also:
- cannot be subdivided or sold separately from the main home
- cannot connect to reticulated gas
- does not need an extra car park
- can be lived in by family or rented out, with residential tenancy laws applying to tenants
The Victorian Government small second dwellings page sets out the official rules. Our guide to small second homes in Victoria explains them in plain language.
What a granny flat is not
A granny flat is not a sleepout, a converted shed or a caravan in the backyard. Because it is a permanent home with its own facilities, it needs a building permit and must meet the building regulations, including energy efficiency and fire safety requirements. It also needs an existing home on the block, which is why you cannot build one on vacant land. See why you can’t build a granny flat on empty land.
Who are granny flats for?
The name suggests a home for grandparents, but granny flats suit many stages of life:
- Ageing parents who want to live close to family while keeping their independence.
- Adult children saving for their own home with space of their own.
- Downsizers who move into the granny flat and rent or hand over the main house. Read about downsizing to a granny flat.
- Tenants looking for a small, private home.
- Home workers who want a separate office or studio.
- Carers who need to stay close to someone they support.
Many households use a granny flat for more than one of these over the years. Our guide to multi-generational living looks at how two households share one block.
The benefits of a granny flat
Family close by, with privacy
A granny flat lets family members live next door rather than under the same roof. Each household has its own front door, kitchen and bathroom, which helps everyone keep their routines and independence.
Flexibility as life changes
A granny flat that houses a parent today could be a home office, a guest space or a rental later. That flexibility is a big part of the appeal.
A second home without buying more land
Because the granny flat goes on land you already own, you add a second home without buying another block. You still need to budget for the build and any site works.
Rental potential
A small second dwelling can be rented out, and residential tenancy laws apply. Rents vary by suburb, finish and demand, so a local property manager is the right person to give you a rental appraisal. Our guide on how to legally rent out a granny flat in Victoria explains the obligations.
If you plan to rent it out, speak with a registered tax agent about how it affects your tax position before you build.
What does a granny flat look like inside?
A granny flat usually has one or two bedrooms, an open-plan kitchen and living area, and a bathroom. At 60m², a well-planned two bedroom layout can feel like a compact full-size home.
Every G-Flat™ is a 60m², two bedroom turnkey build with five floor plans:
- Stella: L-shaped, for corner and irregular blocks.
- Aurora: long and narrow, for tight or side-access blocks, with a walk-in robe in bedroom one.
- Lana: balanced, and fits most backyards.
- Lana 2: the Lana layout with a second bathroom.
- Sirius: square, with large 4 x 3m bedrooms and an L-shaped kitchen.
See 2 bedroom granny flat designs for how each layout works.
What approvals does a granny flat need?
Knowing what a granny flat is under the rules helps you understand the approvals:
- Building permit: required for every small second dwelling.
- Planning permit: not needed in most residential zones. Lots under 300m² and some overlays, such as heritage, bushfire or flood, may need one.
- Title checks: easements and restrictive covenants can limit where or whether you can build. Check your title before you plan the layout.
Our guide to granny flat approvals in Victoria walks through each step, and what makes a block suitable for a granny flat covers the site checks.
How much does a granny flat cost?
Costs depend on size, finish level and your site. A turnkey G-Flat™ is priced by finish level:
| Finish level | Turnkey price |
|---|---|
| Affordable | $198,000 |
| Homestead | $208,000 |
| Signature | $238,000 |
| Luxe | $265,000 |
Prices are a guide only and depend on your site. Sites 70km or more from the Melbourne CBD attract a 12.5% regional surcharge. A free site assessment confirms the price for your block.
All five plans cost the same within a finish level. 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 and soft-close cabinetry
- SPC hybrid flooring
- double-glazed, powder-coated aluminium windows
- a reverse cycle split system
- a 10-year structural warranty and a 6-month maintenance guarantee
See our granny flat inclusions guide and granny flat pricing in Victoria for the full detail.
What is a granny flat compared with other backyard options?
Homeowners often weigh a granny flat against other ways to add space. Here is how they generally differ:
| Option | What it is | Key difference |
|---|---|---|
| Granny flat (small second dwelling) | A self-contained home of 60m² or less with a kitchen, bathroom and toilet | A separate home on the same lot, which can be rented out |
| Studio or sleepout | A room without a full kitchen and bathroom | Not a self-contained home, so it is not a small second dwelling |
| Home extension | Extra rooms added to the main house | Part of the main home, not a second dwelling |
| Tiny home or relocatable cabin | A small home that may be moveable | Rules can differ, so check with your council first |
The right choice depends on who will use the space and whether you want them to live independently. For a closer look, read granny flats vs tiny homes.
Is a granny flat right for you?
A granny flat tends to suit you if you have enough backyard space and access, want family close by or a second home on your land, and are comfortable with a building project in your backyard for several months. It may suit you less if your block is very small or heavily constrained, or if you would rather keep the backyard as open space.
A free site assessment is a simple way to find out whether your block can take a granny flat, which layouts fit and what the build would cost.
How long does a granny flat take to build?
A G-Flat™ takes approximately 5 months end to end, from planning through to handover, including the building permit, construction and connection of services. Our step-by-step guide to building a granny flat in Victoria explains each stage.
Things to think about before you build
Before you commit, it helps to think through:
- who will live in the granny flat now, and who might later
- where it will sit on your block, and how much backyard you want to keep
- how residents will reach it from the street
- whether anyone living there now or later will need step-free access
- whether you want separate utility bills for each home
- how you will fund the build, and whether a mortgage broker should look at your options
Frequently asked questions
What is a granny flat?
A small, self-contained home on the same lot as an existing house. In Victoria it is called a small second dwelling.
How big can a granny flat be in Victoria?
A small second dwelling can be up to 60m² in floor area.
Do I need a permit to build a granny flat?
You need a building permit. Most residential zones do not need a planning permit, but small lots and some overlays may.
Can I rent out a granny flat?
Yes. Residential tenancy laws apply when you rent it to tenants.
Can I sell a granny flat separately?
No. It cannot be subdivided or sold separately from the main home.
Ready to plan your granny flat?
Now you know what a granny flat is, the next step is finding out what your block allows. Book your free site assessment or visit our display G-Flat™.