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If there is enough space between the garage and the fence (>1m) then that would be ideal. Might also look at putting the granny flat near the side fence to provide more separation from the main house. You might then have enough yard to give it a back verandah.

Can you put a diagram of the site and buildings ? How many bedroom windows are on the house and is the house elevated at all ? The two we have built all used the narrow side (less than 2 metres) as this was the most separate and private solution. You want to avoid having any common...