IS THE GRANNY FLAT APPROVED
A granny flat must have received proper building and planning approval before it is rented out. If you purchased a home with an existing granny flat, you can check your sales documentation or with your local council to ensure the structure has been approved.
If you’re thinking about investing n a Granny Flat,
download our “A Property Investor’s Guide to Granny Flats‘
for more information
SELECTING THE RIGHT TENANT
As it is likely the landlord will be living next to or in the same premises as the tenant, landlords should take particular care in the selection process.
Get employment and personal references, then follow them up. Obtain photo identification from the tenant. Meet the tenant to get to know them and discuss the property. If a property agent is being used, ask them to check the tenant’s previous rental history.
Be honest and up-front with potential tenants about the positive and negative aspects of the property, this will reduce the risk of any misunderstandings.
If you are thinking of renting out a granny flat it is important to understand which tenancy laws may apply as this will determine both your rights and your responsibilities.
It is not always easy to work out whether a person is a tenant or a lodger but as a general guide, a tenant is more likely to have a right of exclusive possession of the granny flat.
If you enter into a lodging agreement, the terms of the contract you enter into should set out all of the rights and responsibilities of each party. For example, some basic matters to cover include:
• how much rent is payable and when;
• each party’s responsibilities for maintaining and cleaning the premises;
• who can enter the premises and when; and
• how and when the agreement can be terminated.
If you enter into a written tenancy agreement (lease), the Residential Tenancies Act requires you to use a prescribed (standard) tenancy agreement.
The tenancy agreement becomes a key document between the tenant and landlord. It covers most of the matters concerning the rental of the granny flat. It is important to ensure tenants understand the provisions in the agreement.
In the case of granny flats, it is important to remember you will probably be living very close to the tenant/lessor and sharing some common areas, such as back yards, driveways and maybe even kitchen space. A tenant or lessor will need to be mindful of this because you are not allowed to end a tenancy agreement simply because you do not like the person or have had a disagreement with them.
PROPERTY CONDITION REPORTS
The Residential Tenancies Act requires a property condition report describing the condition of the premises when the tenant moves into and out of the property. This helps to determine if there has been any damage to the premises during the tenancy and whether the tenant is liable for the damage.
RCDs, SMOKE ALARMS AND SECURITY
Before a premise is leased, lessors must have:
• Two RCDs installed on the switchboard, and
• Professionally installed hard-wired smoke alarms fitted
Premises must also have minimum standards of security including a deadlock on entry doors, lockable windows and a light to the front entry of the premises.
Some granny flats will not have separate accounts for public utilities such as water, gas and electricity. If this is the case, the Residential Tenancies Act has specific rules about the payment by a tenant for their consumption of a public utility.
If the granny flat has a separate sub-meter for the utility, the tenant must be provided with a copy of the account which will set out the tenant’s consumption based on the sub-meter readings and the charges for that consumption.
If there is no separate sub-meter for any of these services, the Residential Tenancies Act requires an agreement to be made in writing about how the tenant’s share of the total consumption charges will be worked out.