Do You Need a Planning Permit for a Granny Flat in Victoria?
No. As of the 2024 rule change, granny flats under 60m² are exempt from council planning permits in Victoria. You only need a Building Permit, which costs approximately $3,000.
Key changes in 2024:
- No kinship requirement — your tenant can be anyone, not just a family member
- No planning permit for units under 60m²
- Building Permit only — processed through a private building surveyor, not council
This dramatically simplifies the process compared to other states. In NSW, for example, you still need a Complying Development Certificate or full DA approval.
Land Requirements for a Granny Flat
Not every block can support a granny flat. Here are the minimum requirements:
Minimum lot size: 550–600m² — this gives enough room for setbacks and the granny flat footprint
Side driveway width: Must be wider than 3 metres — this is critical for crane truck access during construction. If your driveway is narrower, construction costs increase significantly due to manual material handling.
Setbacks: Minimum 1 metre from existing fences and the main dwelling
Deal-breakers:
- Sewer line running through the proposed construction zone — cannot build over it
- Severe slope (each metre of fall adds approximately $50,000 in construction costs)
- Heritage Overlay Level 1 or 2 — restricts external modifications
- Special Building Overlay (flood zone) — complicates insurance and approvals
Best block type: Flat or gently sloping, 600m²+ with side access wider than 3m. Corner blocks are ideal as they provide dual access points.
Construction Timeline & Approval Process
Total timeline: 4.5–5.5 months from decision to rental income.
Stage 1 — Paperwork (1–2.5 months):
- Soil testing: ~$4,400
- Building Permit application: ~$3,000
- Builder's insurance: ~$5,500
- Engineering drawings and plans
Stage 2 — Construction (5 weeks to 4 months):
- Foundation and slab
- Frame and roof
- Internal fit-out (electrical, plumbing, kitchen, bathroom)
- External finishing
- Weather can extend this timeline
Stage 3 — Occupancy Certificate (OC) (~3 days):
- Final inspection by building surveyor
- OC is mandatory before you can legally rent the granny flat
- Without OC, your insurance may not cover tenant-related claims
Hidden costs to budget for:
- Rock removal: $300/m³ (if encountered during excavation)
- Hard surface cutting: $200/linear metre
- Deep sewer connections (beyond 0.6m): $500–$2,000 additional
- Owner Builder licence can save $3,000–$5,000 if you self-manage
Utility Setup — Avoid the $20,000 Mistake
Never install a separate water/sewer meter. An independent meter costs $20,000–$30,000 AND doubles your council rate bills.
The smart approach:
- Install an internal sub-meter: $500–$1,000
- Rent the granny flat "bills included" — adding $30–$35/week to the rent
- Share the main house electricity connection
- Install solar panels with battery storage for overall cost reduction
Example:
- Base rent: $340/week
- Bills-included rent: $370–$390/week
- Annual bills cost to you: ~$1,500
- Annual bills income from tenant: ~$1,820
- Net benefit: $320/year profit on utilities, plus no $20K meter cost
This is the standard approach used by 90% of successful granny flat investors in Melbourne.