Unapproved Grannyflats - So What?!?

[Mindmaster]

Coming across a lot of places around Sydney that have a grannyflat stuck out the back for extra income. Most of these granny flats are not council approved which is not a good thing but exactly how bad is it? If you have an unapproved grannyflat, so what??? What can happen? What are the risks.

This is what I've come up with so far
-if the council catches you, you may have to get rid of your tentants which causes a LOT of problems

-can't get any one to insure you

-if anything happens to the tenant, ie accident, they will sue you

What else is there?

 

[Nathan]

Place burns down and tenant dies its manslaughter?

People pay a premium for these properties where you can buy better value elsewhere?

Headaches?

Slows ones acquisition phase down?

Inability to purchase below market value?

In turn from last point, paying too much makes the return poor...

Just a few thoughts...

 

[Doovalacky]

Even just the cost of removal if a neighbor or tenant reports it to council.

 

[redwing]

Coming across a lot of places around Sydney that have a grannyflat stuck out the back for extra income. Most of these granny flats are not council approved which is not a good thing but exactly how bad is it? If you have an unapproved grannyflat, so what??? What can happen? What are the risks.

This is what I've come up with so far
-if the council catches you, you may have to get rid of your tentants which causes a LOT of problems

-can't get any one to insure you

-if anything happens to the tenant, ie accident, they will sue you

What else is there?

Russian Roulette

Just because the last person didn't get the bullet doesn't mean you will

I'd add in fines, requirement to cease use, or to get the dewlling approved, additional costs to bring it up to the building code etc

If you're looking at an IP with a GF I'm presuming that the price for the GF (even if unapproved) is built in?

I've even seen advertisements on rea.com.au saying "unapproved Granny Flat"

 

[Crystal]

Hi Mindmaster,

I have purchased quite a few houses with granny flats. I was insured with CGU and I had fully disclosed that the granny flats were not council approved.
Eventually the inevitable happened and there was a fire in one of my granny flats - fortunately no-one was injured or killed.
After a long and drawn out negotiation, the insurance company paid out a lump sum and then promptly refused to insure me (or my brothers) for any of our properties.
I now have insurance for house plus cabin - council approval has not been mentioned.
My fear is that something might happen to either the house (which is council approved) or the cabin (which isn't) or the tenants - and the insurance company refuses to pay for anything!
I'd be eternally grateful if someone could recommend an insurance company who does insure non-council approved granny flats - I would certainly be willing to pay a premium.

Good Luck,
Crystal

 

[Doovalacky]

While I would hate to be in that situation it is possible to get retrospective approval for a construction. Higher cost than a normal approval.

Before contacting the council however I would be getting someone in to inspect it and make sure the building is actually built to code. Then if possible fix any issues.

Getting it approved closes some doors for getting your *** sued and losing all. What if someone had been hurt for example in the fire? In all likelihood the insurer would tell you your public liability insurance is null and void...

 

[Mindmaster]

Haha even worse than I thought.

Way more trouble than it is worth to have an unapproved GF and that is without considering the ethical issues.

A better way would be to get a GF can can be approved by council with minimal work or get a block that is suitable to wack up a cheap 50-60k GF that meets council approval.

 

[joeExpat]

I had one in Australia, it got flooded, I paid for all the tenants damages and his moving expenses then gave it to the main house tenant as 3 storage rooms. They're not worth it.

 

[brazen]

Coming across a lot of places around Sydney that have a grannyflat stuck out the back for extra income. Most of these granny flats are not council approved which is not a good thing but exactly how bad is it? If you have an unapproved grannyflat, so what??? What can happen? What are the risks.

This is what I've come up with so far
-if the council catches you, you may have to get rid of your tentants which causes a LOT of problems

-can't get any one to insure you

-if anything happens to the tenant, ie accident, they will sue you

What else is there?

Yea, the risk outweighs the benefit to be honest. An unapproved granny flat catching fire would be the highest risk imho. You don't want that on your hands hey.