Could Granny Flats Be a Smart Move for Kiwi Homeowners?

I’ve been having more and more conversations lately that start the same way.

“We’re not investors… but we’re thinking about adding a granny flat.”

A few years ago, that idea usually stopped right there. Too many council rules. Too much uncertainty with banks. Too hard to justify the cost.

That’s changed.

Recent national changes have made it far easier to add a small, self contained dwelling to an existing property. And for home upgraders, this has opened up a genuinely practical option that didn’t really exist before.

What a granny flat actually means in practice

You’ll hear a few different names. Minor dwelling. Secondary unit. Self contained dwelling.

The label doesn’t matter much. What does matter is function.

A granny flat is a fully self contained home on the same title as your main house. Separate entrance. Kitchen. Bathroom. Living space.

It gives people independence, without creating distance. That’s why they work so well for families.

The change that’s made all the difference

National planning changes now allow many granny flats to be built without needing resource consent, as long as they meet set size and design standards.

That’s a big shift.

It removes months of delays and a lot of uncertainty. You still need building consent. You still need compliant services. But the biggest planning hurdle has been lowered across much of the country.

For homeowners, that means clarity. And clarity changes behaviour.

Why home upgraders are leaning in

Most of the clients I see exploring this already own good homes.

They’ve upsized. They like their neighbourhood. They’re thinking longer term.

Common reasons come up again and again:

• Parents who want to be close but not under the same roof

• Adult kids who need a leg up

• Extra space for blended families

• Future income without having to move

A granny flat keeps options open. It adapts as life changes.

You don’t have to decide everything upfront. That flexibility is its real strength.

Don’t skip the quiet stuff. Power, water and services matter more than people think

This is the part that rarely comes up early enough.

Before plans are final, it’s worth talking to utility providers. Power, water, wastewater and stormwater can make or break a project, both on cost and timing.

A few things I regularly flag with clients:

• Power: You may need a new connection, upgraded capacity, or a separate meter. That can take time and isn’t always cheap

• Water and wastewater: Councils often require confirmation that the network can handle an extra dwelling. Upgrades or contributions may apply

• Stormwater: Additional roof area can trigger on site drainage requirements

• Access and trenching: Distance from the main house matters. Longer runs mean higher costs

These aren’t deal breakers, but they need to be understood early. I’ve seen good projects delayed simply because service upgrades weren’t factored in.

From a lending perspective, banks also like certainty here. Clear service plans reduce risk, which helps when valuers and credit teams assess the build.

The rule of thumb is simple. If you’re serious about a granny flat, talk to utilities before you lock in design or funding. It saves time, money, and a lot of back and forth later.

How banks actually look at granny flats

This is where experience matters.

Not all lenders treat granny flats the same way. Some are comfortable. Others are cautious.

Banks will look at:

• How the dwelling is consented

• Whether it’s genuinely self contained

• How it’s valued

• Whether any rental income is proven

Rental income may be counted in full, discounted, or not used at all depending on the lender and structure.

Funding is usually done through:

• Releasing equity from the main home

• A construction loan paid in stages

• A mix of both

The structure matters more than most people realise. Done well, it preserves flexibility. Done poorly, it could limit future borrowing.

The common traps to avoid

Most problems aren’t dramatic. They’re practical.

I often see people caught out by:

• Underestimating water and wastewater costs

• Assuming all banks will treat the income the same

• Designing for today without thinking about resale

• Leaving the finance conversation too late

None of these are massive mistakes. But they’re far easier to manage early.

A long term play, not a quick win

The best granny flat decisions are made calmly.

They’re about staying put. Supporting family. Creating options. Adding quiet resilience to a household’s finances.

They don’t shout. They just work.

The bottom line

Granny flats have moved from niche idea put into the too hard basket to a genuine strategy for Kiwi homeowners.

The rules are simpler. The pathway is clearer. The use cases are real.

But the finance still needs to be right.

If you’re thinking about adding one, start with advice. Not plans. Not pricing.

A good conversation early can save a lot of stress later.

Important note:

The national rules have made things simpler, but they haven’t removed councils from the picture entirely. Local conditions still matter. Before you lock anything in, have a quick chat with your council to make sure there aren’t any site-specific requirements or limits you need to plan around.