What our analysis shows
Analysis by Granny Flat Numbers, data as of 23 October 2026
- At Sydney's median one-bedroom detached rent, a $15,000 compliance bill is recovered in about 42 weeks of rent after agent fees and tax. A $60,000 rebuild of slab, ceiling or fire wall takes about 3.2 years.
- In the forum reports we coded, unapproved flats surfaced at sale or through complaints: a council inspection after a neighbour's complaint, a council notice after settlement, a records search that found only workshop approval from the 1970s.
- A 2025 NSW buyer was given a rental appraisal for a new house's studio flat by the selling agent, then told by council after settlement that it could not be rented until about $15,000 of work was done. A rental appraisal is not evidence of approval.
- Legalising is a different process in each state. NSW and WA issue certificates for existing unauthorised work; Victoria does not issue retrospective building permits. A complying development certificate cannot approve work that has already been built.
Weeks of rent to recover a legalisation bill (Sydney 1-bed)
- $10,00028 weeks
- $15,00042 weeks
- $30,00084 weeks
- $60,000169 weeks
Rent $550/wk (NSW bond median for 1-bed detached dwellings, Jul–Sep 2026), less 7.7% agent fee and 30% tax.
What unapproved means
A granny flat is approved when it has planning approval for use as a dwelling (a CDC, development approval or permit, depending on the state) and building approval, with a final inspection or occupation certificate. A flat can be partly approved: a studio approved as a home office, a garage approved as a garage, a workshop with plumbing approved but not for anyone to live in. Using it as a self-contained dwelling then needs approval for that use as well.
The risks
- Council orders. To stop the use, make it comply, or demolish. Councils mostly act on complaints, often from neighbours.
- Insurance. Insurers may refuse a claim connected with a structure used in a way it was not approved for, especially if a tenant is hurt or a fire starts in it.
- Safety. The approval process checks damp-proofing, fire separation, smoke alarms, ceiling height, wiring and drainage. Without it you do not know.
- Lending and sale. Valuers usually give an unapproved flat no value, lenders do not count its rent, and the contract for sale must disclose it in most states.
Legalising by state
| State | Route for existing work |
|---|---|
| New South Wales | Building information certificate from council for the existing work, plus approval for its use as a secondary dwelling (CDC is not available for work already done) |
| Victoria | No retrospective building permit; a building surveyor may issue a permit for rectification work, and a planning permit may be needed for the use |
| Queensland | Retrospective building approval through a building certifier; linings or cladding may have to be removed for inspection, and an owner-builder permit cannot be issued retrospectively |
| Western Australia | Building approval certificate from the local government for unauthorised work |
Whichever route applies, the building has to meet the code for a dwelling, which means reports and often opening walls. Owners in our forum sample listed the usual items: damp-proofing the slab, a fire-rated wall where the flat adjoins another building, termite protection, a structural engineer's certificate for the frame and a minimum 2.4 m ceiling in habitable rooms. Start with a building certifier or surveyor's inspection, not with an application, so you know what has to change.
Is it worth legalising?
Weeks of rent needed to recover the bill, after agent fees and tax at 30%:
| Legalisation bill | Sydney 1-bed detached ($550) | Western Sydney 1-bed detached ($450) | Brisbane 1-bed ($590) |
|---|---|---|---|
| $10,000 | 28 wks | 34 wks | 26 wks |
| $15,000 | 42 wks | 52 wks | 39 wks |
| $30,000 | 84 wks | 103 wks | 79 wks |
| $60,000 | 169 wks | 206 wks | 157 wks |
Paperwork, minor fixes and a certificate in the $10,000–15,000 range pay for themselves within a year of rent. If the slab, ceiling height or boundary setback cannot comply, the bill approaches the cost of a new flat, and demolishing and building new can be the better choice; compare with our cost calculator.
Buying a property with one
- Ask the agent and the vendor in writing which approvals exist for the flat, and check council records yourself.
- Have the building inspection cover the flat as a dwelling: damp, wiring, smoke alarms, fire separation, drainage.
- Price the property as if the flat may have to be returned to its approved use, and treat any rent as a bonus.
- Do not rely on a rental appraisal from the selling agent.
More first-hand cases are in what owners report.
This week's worked example
Week of 19 October 2026. A new example, rule and owner report every Monday.
A 60 m² two-bedroom flat with a standard finish on a steep block, services 12 m from the house, in Southern Adelaide: our model puts it at $220,000 turnkey ($193,500–$246,500), or $3,670 per m². At the area's median 2-bedroom bond rent of $550 a week it would return 10.3% net and pay back in 12.7 years after tax.
Rule check: A NSW complying development certificate for a detached granny flat needs a lot of at least 450 m²; under the SEPP, 450 m² is also a non-discretionary standard for a development application, so council cannot refuse a DA on lot size if the lot meets it.
From an owner (NSW, 2023): A buyer walked away from a Liverpool house whose granny flat had been built from an old carport and workshop on the boundary without approval.
Questions people ask
Can I rent out an unapproved granny flat?
A tenancy agreement for it can still exist, but renting a structure not approved as a dwelling exposes you to council orders, possible insurance problems if something goes wrong, and liability if a tenant is hurt. Many councils act on complaints.
How do I get an unapproved granny flat approved?
It depends on the state. In NSW you apply to council for a building information certificate for the existing work and approval for its use. In WA you apply for a building approval certificate. In Queensland a building certifier can give retrospective approval, which may mean opening up walls and ceilings for inspection. In Victoria there is no retrospective building permit; rectification work needs a permit.
Should I buy a house with an unapproved granny flat?
Only if the price allows for legalising or removing it. Get a building inspection that covers the flat, ask council what approvals exist, and assume the rent cannot be counted by your lender.