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3 reasons why granny flats are causing strife for NSW renters

By Juliet Helmke
31 May 2022 | 12 minute read
granny flat reb

Complaints relating to granny flat rentals are up in NSW, as a tightening vacancy rate encourages property owners to leverage a secondary dwelling on the competitive market.

The state’s tenants’ union reports that an increasing number of granny flat rentals have been hitting the market in NSW, where there are fewer restrictions on renting out a secondary dwelling than in other Australian states. But so too are issues relating to these dwellings on the rise, as the group has been receiving a growing number of calls related to the property class.

Grant Arbuthnot, principal solicitor of the NSW Tenants’ Union, said these concerns have particularly been arising in the Central Coast, Hunter and south-west Sydney – areas with homes that are well suited for the construction of a second dwelling.


It’s in these future construction plans that many of the conflicts are occurring.

“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,” Mr Arbuthnot said.

In this situation, he advised tenants to seek a negotiation with a landlord or to apply to the NSW Civil and Administrative Tribunal for a remedy, such as a rent reduction. He noted, however, that in most of these instances, the tenancy is usually terminated.

Another issue arising that is particular to granny flats relates to the payment of utilities. While many landlords manage their granny flat properties as they would any other dwelling, some do not realise that they cannot charge for water or electricity unless it is separately metered for the renter’s premises.

If a landlord has been charging for utilities on unmetered dwellings, the tenant is due to have this money returned. If the reimbursement is not forthcoming, they are advised to apply to the tribunal for an order that the money be repaid.

The final way in which granny flat tenancies have been causing strife for both tenants and landlords is when the dwelling is an unlawful construction, which may come as a surprise to the renter and even the property owner if and when the council finds out.

“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,” Mr Arbuthnot explained.

When the local council discovers the existence of the dwelling, they usually require that the residential use cease. Tenants and landlords should be advised that in this instance, they still have to terminate the rental agreement. 


Juliet Helmke

Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.

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