Granny flat blues – challenges and trends

Grant Arbuthnot • 23/05/2022

The housing crisis in NSW continues. One outcome of this has been an increase in the construction and occupation of ‘granny flats’. These are typically small, self-contained dwellings located in the backyard or back part of a larger house. Traditionally they were intended for use by an elderly relative, but in recent times they are often rented in the private rental market.

All of the typical tenancy problems come up in relation to granny flats, as well as some additional challenges. We have noticed an increase in the number of people seeking advise about tenancy disputes involving granny flats from their local Tenants' Advocacy Services - particularly in the Central Coast, Hunter and South West Sydney.

This blog explores the issues and trends we see emerging by looking at disputes that can arise at installation, during a granny flat tenancy & when the tenancy ends.

When a new granny flat is installed

Disputes often arise when a landlord decides to install a granny flat in the yard of an existing tenancy. This is, of course, a breach of the access and privacy terms of the tenancy contract. Landlords sometimes start work without any notice to the tenant and so there is no time to object or negotiate. In this process, the existing renters frequently lose equanimity, backyards, sheds, clotheslines, driveways, carports, fences, dogs, privacy, electricity and water (and entire tenancies).

The existing renters may consider negotiating with the landlord, or applying to the NSW Civil and Administrative Tribunal for a remedy, such as a rent reduction or for the landlord to cease breaching access rules. However, the power imbalance between the parties and low vacancy rates often means that renters cannot in practice stop the work or gain compensation or other remedies.  Sadly, asserting your rights as a renter often means that the tenancy will end at the soonest opportunity, frequently through a ‘no grounds’ termination notice.

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During a granny flat tenancy

Disputes during a granny flat tenancy are often like neighbour disputes, except that there is added to the proximity of the parties the fact that one of the neighbours is often the landlord or a relative of the landlord. This makes relations more difficult. In the matters where tenant advocates have provided advice we're aware there have been mutual assaults and damage to property. Landlords and renters have called police and had both good and bad experiences, mostly not including drawn service pistols!

Landlords are often surprised and affronted that tenancy law covers the arrangement and continue to behave as if it does not. Renters are often aggrieved at their housing, for which they pay, being made very uncomfortable by the dispute.

Another common problem during granny flat tenancies is payment for utilities.  Landlords cannot charge for water or electricity unless it is separately metered for the renter's premises.  If a renter has been illegally charged for utilities, they can ask the landlord for the money to be returned. If the landlord does not return it, the renter can apply to the Tribunal for an order that the money be repaid.  However formal dispute does not help cordial relations across the back yard.

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Ending a granny flat tenancy

Legally, granny flat tenancies end in all the usual ways of other tenancies. But there is an interesting problem that is more common than usual. Some granny flats are not lawful dwellings. Such tenancies can go on for years without the renter knowing!

Indicators of unlawful dwellings include that there is no separate mailbox and no separate Council rubbish bins. If there is a separate mailbox, the postie will not deliver to it. When the local Council finds out, they usually require that the residential use cease. This action by Council does not end the tenancy contract. So, the landlord and renter have to end the tenancy according to the Residential Tenancies Act. This can be by mutual consent (in writing) and vacation. Renters can negotiate with landlords for some rent waiver before vacation to help them move out.

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If you need advice in relation to a granny flat, or another aspect of renting, please contact your local Tenants Advice and Advocacy Service.


Teaser image photo credit (granny flat): Susan Fitzgerald, Source: Flickr.