Granny flat rules compared: Blacktown to Campbelltown

Across Blacktown, Penrith, Liverpool and Campbelltown the baseline for a granny flat is the same: Chapter 3 Part 1 of State Environmental Planning Policy (Housing) 2021 permits a secondary dwelling with consent on residential land where a dwelling house is permitted, caps its floor area at 60 square metres unless the local LEP allows more, and allows complying development on lots of at least 450 square metres that meet the standards in Schedule 1. The differences sit in each council’s Clause 5.4(9), which sets the alternative percentage of the principal dwelling (5 per cent in Blacktown, 10 per cent in Penrith, 25 per cent in Liverpool and Campbelltown), and in the DCP layer, such as Penrith’s two bedroom cap and 450 square metre rule excluding the access handle, and Blacktown’s Part C requirements for secondary dwellings. For investors the practical outcome is a 60 square metre flat in most cases, a larger one only where the main house is big and the LEP percentage is generous, and a yield that depends more on the block and the build cost than on the council. This article sets out the comparison.

Who this is for: investors comparing granny flat opportunities in Blacktown, Penrith, Liverpool and Campbelltown who want the state baseline and each council’s additions in one place before running the numbers.

What does the Housing SEPP 2021 allow everywhere?

Chapter 3 Part 1 of the Housing SEPP is the statewide baseline. Section 50 applies the Part to secondary dwellings on land in a residential zone (R1 to R5) where a dwelling house is permissible under another instrument. Section 51 prohibits subdivision of a lot developed under the Part, so a granny flat can never be sold separately. Section 52 permits the development with consent provided no dwellings other than the principal and secondary dwelling will be on the land, the combined floor area does not exceed the maximum for a dwelling house under the LEP, and the secondary dwelling’s floor area is no more than 60 square metres or the greater figure the LEP allows.

Section 53 lists non-discretionary development standards: a minimum site area of 450 square metres for a detached secondary dwelling, and parking equal to what existed before the development. Under Section 4.15(3) of the EP&A Act a council cannot refuse a DA on those matters if the standards are met, and cannot require more onerous standards for them. Section 54 then makes a secondary dwelling complying development where the lot is in a residential zone other than R5, is at least 450 square metres, is not excluded land under Clause 1.19 of the Codes SEPP, meets the general requirements in Clauses 1.17A and 1.18, and meets Schedule 1. Sections 57 and 58 add bushfire and flood control lot standards for complying development.

Schedule 1 is where the numbers sit. Clause 2 requires a primary road frontage of 12 metres for lots of 450 to 900 square metres, 15 metres up to 1,500 square metres and 18 metres above that, or for a battle-axe lot an access laneway of at least 3 metres and a lot of at least 12 by 12 metres excluding the laneway. Clause 3 caps site coverage of all buildings at 50 per cent on lots up to 900 square metres, 40 per cent up to 1,500 square metres and 30 per cent above. Clause 4 caps the flat at 60 square metres (or the LEP figure) and caps the combined floor area of both dwellings and attached structures at 330 square metres on lots up to 600 square metres, 380 square metres up to 900 square metres and 430 square metres above. Clause 6 limits height to 8.5 metres, and Clauses 7 to 10 set front setbacks matching neighbours or 4.5 metres, side setbacks of 0.9 metres on lots up to 900 square metres, and rear setbacks of 3 metres on those lots rising with building height above 3.8 metres.

What does each council’s LEP add?

Each Standard Instrument LEP contains Clause 5.4(9), which sets the floor area of a secondary dwelling on non-rural land at the greater of 60 square metres or a percentage of the total floor area of the principal dwelling. The percentages are:

• Blacktown LEP 2015 Clause 5.4(9): 5 per cent. A 300 square metre house gives 15 square metres, so the 60 square metre cap is the practical limit on every Blacktown lot.
• Penrith LEP 2010 Clause 5.4(9): 10 per cent. Only a house over 600 square metres of floor area lifts the flat above 60 square metres, so again 60 square metres is the working figure.
• Liverpool LEP 2008 Clause 5.4(9): 25 per cent. A 280 square metre house allows a 70 square metre flat, and a 320 square metre house an 80 square metre flat.
• Campbelltown LEP 2015 Clause 5.4(9): 25 per cent, on the same basis as Liverpool.

Because Section 52(2)(c) and Schedule 1 clause 4 of the Housing SEPP both defer to a larger LEP figure, the 25 per cent councils allow a bigger flat under both the DA and the CDC pathway, subject to the combined floor area caps in Schedule 1 for complying development and to the site coverage and landscaped area controls of the DCP for a DA. The lot size clauses also matter for investors planning to add a flat to a duplex site: Blacktown LEP 2015 Clause 4.1B, Penrith LEP 2010 Clause 4.1A, Liverpool LEP 2008 Clause 4.1AB and Campbelltown LEP 2015 Clause 4.1B set dual occupancy minimums, and a lot with a dual occupancy cannot also carry a secondary dwelling because Section 52(2)(a) allows only the principal and secondary dwelling on the land.

What do the DCPs add?

Penrith DCP 2014 Part D2 Section 2.3 is the most prescriptive of the four. Section 2.3.1 sets a minimum lot size of 450 square metres for a secondary dwelling, excluding the access handle on battle-axe lots; allows conversion of an existing outbuilding only where it meets the Building Code of Australia and the principal dwelling complies with the DCP’s parking requirements; limits a secondary dwelling to two bedrooms; and requires the development to sit within the site’s building envelope, a 45 degree plane from a set height at the side boundaries. Section 2.3.2 requires the flat not to compromise the principal dwelling’s landscaping, with Table D2.3.1 setting minimum landscaped area at 50 per cent of the site in R2 and 40 per cent in R1.

Blacktown DCP 2015 Part C Section 4 deals with dual occupancy housing and secondary dwellings together. It applies the Clause 4.1B lot sizes of 500 square metres for attached and 600 square metres for detached development, prohibits conversion of existing garages and sheds unless full compliance with the DCP and the Building Code can be shown, sets the street setback and corner lot rules, and in Section 4.2 restates the Clause 4.1C subdivision position: subdivision of a secondary dwelling is generally prohibited except on corner lots where each dwelling faces a different street and each lot is at least 300 square metres. The Housing SEPP’s Section 51 prohibition on subdividing a Housing SEPP secondary dwelling still applies, so the corner lot exception in practice concerns dual occupancies approved under the LEP.

Liverpool DCP 2008 and Campbelltown (Sustainable City) DCP 2015 both contain residential chapters with secondary dwelling and ancillary development controls covering setbacks, private open space, landscaping and parking; the specific figures were not readable in the parts reviewed for this article, so confirm them against the current DCP on each council’s planning controls page before relying on a design. Where a DCP control competes with the Housing SEPP’s non-discretionary standards, Section 53 prevails on site area and parking, but the DCP still governs matters such as private open space and privacy on a DA.

Council by council comparison

Yield and rental considerations

A granny flat is a rental product, so yield is the point. The gross yield is the annual rent divided by the total cost (design, approvals, contributions, construction, services connections and landscaping). We do not publish rent figures because they move quarterly and vary street by street; the right inputs are current listings for one and two bedroom flats within a kilometre of the site. Three site factors move the number more than the council does. First, separate access and private open space: a flat that shares the front door and the yard rents for less and creates management friction. Second, the two bedroom question: Penrith caps a flat at two bedrooms and the 60 square metre envelope fits two small bedrooms anywhere, but the 25 per cent councils allow a more rentable 70 to 80 square metre two bedroom flat on a larger house. Third, the block: a 450 square metre lot that only just qualifies leaves the flat squeezed against the rear boundary at 3 metres with little open space, while a 600 to 700 square metre lot gives both dwellings a yard and better rent.

On the cost side, contributions differ. Each of the four councils charges its Section 7.11 plan rate per additional dwelling; a secondary dwelling is an additional dwelling, so budget for it and ask the council for the current indexed figure. The Housing and Productivity Contribution should also be checked through the Department’s calculator. Detached flats need their own sewer and stormwater connections, which is where the cost overruns usually sit, particularly on Sydney Water sites where the sewer runs through the back of the lot.

How to test a block for a granny flat, step by step

1. Order the Section 10.7(2) and (5) certificate and confirm the zone is R1 to R4, that a dwelling house is permitted, and whether item 4 says the Housing SEPP complying development provisions can be used on the land.
2. Measure the lot from the deposited plan, excluding any access handle, and test it against the 450 square metre minimum and the Schedule 1 frontage of 12 metres (or 3 metres of laneway and 12 by 12 metres for a battle-axe lot).
3. Calculate the floor area of the principal dwelling and apply the council’s Clause 5.4(9) percentage to see whether anything above 60 square metres is available.
4. Check site coverage and landscaped area with the flat added: 50 per cent site coverage under Schedule 1 for a CDC, or the DCP landscaping figure (50 per cent in Penrith’s R2 zone) for a DA.
5. Locate the sewer, stormwater discharge point and services, and price the connections, because these drive the build cost more than the flat itself.
6. Obtain the council’s indexed Section 7.11 contribution for one additional dwelling and check the Housing and Productivity Contribution calculator.
7. Decide the pathway: CDC where every Schedule 1 standard is met, otherwise a DA with a statement of environmental effects addressing the DCP, then lodge on the NSW Planning Portal with the BASIX certificate.

Definitions

Secondary dwelling

A self-contained dwelling on the same lot as a principal dwelling, either within, attached to or separate from it, as defined in the Standard Instrument and regulated by Chapter 3 Part 1 of the Housing SEPP 2021; commonly called a granny flat.

Principal dwelling

The main house on the lot. The Housing SEPP measures the secondary dwelling’s permitted floor area against the principal dwelling’s total floor area where the LEP uses a percentage.

Non-discretionary development standard

A standard identified under Section 4.15(3) of the EP&A Act which, if complied with, prevents the consent authority from refusing the application on that ground or imposing a more onerous standard; Section 53 of the Housing SEPP sets two for secondary dwellings.

Total floor area

For Clause 5.4(9) of the LEPs, the floor area of the dwelling excluding any area used for parking; for Schedule 1 of the Housing SEPP, the area within the outer face of external walls measured at 1.4 metres above floor level, excluding eaves, stairs, lift shafts and voids.

Site coverage

The proportion of the lot covered by buildings, capped by Schedule 1 clause 3 of the Housing SEPP for complying development at 50, 40 or 30 per cent depending on lot size, with driveways, pools, eaves and unenclosed decks excluded.

Gross yield

Annual rent divided by total project cost, before vacancy, management, maintenance, insurance and tax; the first-pass measure investors use to compare granny flat sites.

URBA prepares statements of environmental effects and pathway advice for secondary dwellings across Blacktown, Penrith, Liverpool and Campbelltown, checking the LEP percentage, the DCP layer and the CDC standards against your block before you commit. See our secondary dwelling and granny flat planning service and our Penrith town planner page, or request a fee proposal for a site.