Data collected by BMT Tax Depreciation, Australia’s leading tax depreciation specialist, indicates that in the 2016-2017 financial year there was a 22 per cent growth in the number of schedules requested for granny flats nationwide.

Of the states Queensland, Western Australia and New South Wales saw the highest growth in the number of depreciation schedules requested for this type of property.

“Key growth areas in New South Wales which stood out in terms of the number of depreciation schedules requested during 2016-2017 when compared with the previous financial year included the Central Coast with a 105 per cent increase, Wollongong with a 150 per cent increase and the Blue Mountains with a 150 per cent increase,” Mr Beer said.

“In Queensland South East Brisbane saw a 275 per cent increase, Caloundra a 400 per cent increase and Cairns a 150 per cent increase in schedules requested for granny flats during 2016-2017 while Greater Perth and Mundaring in Western Australia both saw a 200 per cent increase in requests,” said Mr Beer.

BMT believe the increase in depreciation schedule requests for granny flats is an indicator that investors are looking for affordable alternatives given recent increases in median house and unit prices, particularly in the capital cities. It could also be due to the fact that investors are trying to increase the rental yields they can earn.

“The Australian property market has recently experienced a period of strong capital growth. However, this has been offset for many investors by a fall in the indicative yield of their portfolios,” Mr Beer said.

“This has led many investors to consider creative means to boost their portfolio’s yield, such as the addition of a granny flat which can be constructed for around $121,000 and rented at a rate achieving around a 15 per cent yield annually,”

“This is far higher than the rental yield typically achievable on a house or unit in Australia, making granny flats an interesting investment proposition,” Mr Beer said.

The Affordable Rental Housing – State Environmental Planning Policy which allows New South Wales property owners to rent their secondary dwellings came into place in 2009 and since then there has been a steady increase in the number of investors choosing to build and rent out granny flats.

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Source BMTQS