Over the next three years, thousands of Queenslanders will be able to move into existing granny flats that may have previously been occupied by the homeowner’s family member or a teenager in the home who has since moved out. 

Homeowners are now being encouraged to rent out secondary dwellings, such as granny flats, to more than just their immediate family to make it easier for Queenslanders looking for more easily accessible and affordable accommodation options amidst the state’s housing crisis. 

The Queensland Government has said that the changes are for a three-year period only, at this stage.

Granny Flat Regulations in Queensland

Previously homeowners were restricted to only renting out a granny flat to someone in their immediate family, but now those restrictions have been removed. Now granny flats can also be rented out to someone other than an immediate relative.

According to the Queensland Government, the relationships and interactions between those who live in the home will no longer be as scrutinised during development assessments and won’t factor into how a piece of land will be used.

Are granny flats a good investment?

Queenslanders looking for affordable accommodation now have the opportunity to live in a granny flat that may have not previously been rented out. And choosing to rent out a granny flat will allow homeowners to collect rent from a wider population of tenants.

To get the most out of a granny flat as an investment make sure you know what to do to settle in as a new landlord. You can start by:

  • Ensuring you have an understanding of your rights and responsibilities as a landlord

  • Establish a rental amount so you can attract the right tenant and have a signed rental agreement in place 

  • Keeping up with repairs and maintenance so your granny flat stays in good condition

  • Consider engaging a real estate agent to manage the rental

Insuring Your Granny Flat with Budget Direct

Your granny flat would need to be insured together with your main residence and your sum insured must take into account both buildings. 

For example, if your main residence is worth $500,000 and your granny flat is worth $200,000, the nominated sum insured to insure your property as a whole would be $700,000.

The main distinction to make is whether you’ll list your property as ‘Owner-Occupied’ or ‘Rented to Tenants’. Both options are acceptable for insuring a granny flat but they’ll cover different things. And you can only choose one or the other since, again, you won’t be able to insure your main residence and granny flat separately. 

Here’s what’s covered based on which option you choose.

Insure Your Granny Flat as ‘Owner-Occupied’

If you choose to list your main residence and granny flat as ‘Owner Occupied’, you’ll be able to add optional covers including Personal Effects and Accidental Damage. This option will cover both your main residence and granny flat, even if you’re renting out your granny flat. 

If you have specified personal effects like an engagement ring that you want covered by your insurance policy at the main residence, listing your property as ‘Owner-Occupied’ may be your preferred choice so that you can add Personal Effects cover to your policy – an option that’s not available if it’s listed as ‘Rented to Tenants’.

Insure Your Granny Flat as ‘Rented to Tenants’

If you choose to list your main residence and granny flat as ‘Rented to Tenants’, this allows you to add ‘Landlord Options’ as an optional cover which includes cover like ‘Tenant Default’ and ‘Malicious Damage or Theft by a Tenant’.

So, if you’re more concerned about losing out on rent due to tenant default or malicious damage or theft by the tenants living in your granny flat, this could be your preferred option as Landlord Options are not available if your property is listed as owner-occupied. This will also mean the policy will include the additional benefit of loss of rent as a result of an insured event.

Optional Covers Based on Occupancy Type

When it comes to adding optional covers to your Home Building Insurance, Contents Insurance or combined Home and Contents Insurance policy to insure your granny flat, it’s important to consider your primary needs and decide which optional covers are best for your situation.

Refer to the table below for optional covers available based on the type of occupancy.

Optional Covers Owner Occupied Rented to Tenants
Building Contents Building Contents
Motor Burnout
Accidental Damage*
Sum Insured Safeguard
Personal Effects
Commercial Storage
Landlord Options
Tenant Default
Malicious Damage and Theft by Tenant

* You are not covered for accidental loss or damage caused by a tenant living in the home or a paying guest staying in the home.

If you’re in doubt about how to insure your granny flat and main residence, please contact us.

Learn more about Budget Direct’s Home Insurance.