Granny Flat Agreements: Everything You Need to Know to Protect Your Family

The idea of building a granny flat on your property is becoming increasingly popular in Perth – chances are you’re excited by the potential of extra living space too.

Granny flats offer homeowners a smart way to maximise space, generate rental income, or provide independent living for family members.

But before you hand over the keys, there’s one crucial element you shouldn’t overlook—a granny flat agreement.

In this article, we’ll break down what a granny flat agreement is, why it matters, and what you should include to safeguard your property and relationships. 

Whether you’re a homeowner looking to accommodate a loved one or a landlord exploring rental opportunities, this guide will help you navigate the legal and practical aspects of setting up this type of portable building in Perth.

This is a legal arrangement that outlines the rights and responsibilities of both the homeowner and the occupant of the portable building.

These agreements are particularly useful when the living space is provided to a family member, ensuring clarity on financial contributions, occupancy terms, and future arrangements.

Types of Granny Flat Agreements

• Family Agreements – Often used when parents move in with their children, specifying contributions towards construction or maintenance in exchange for lifetime occupancy.
• Rental Agreements – A formal lease agreement where the homeowner rents out the portable building to a tenant, following standard tenancy laws.
• Investment Agreements – Used when a homeowner builds a granny flat as an investment property, often with a financial agreement detailing profit-sharing or rental returns.

Advantages

• Legal Protection – Prevents misunderstandings by clearly outlining financial arrangements, occupancy rights, and exit strategies.
• Financial Security – Provides clarity on financial contributions, whether it’s a lump sum, rental payments, or shared expenses.
• Family Harmony – Helps avoid disputes by ensuring all parties are on the same page regarding responsibilities and expectations.
• Property Value Enhancement – A portable building can increase the value of your property, making it a worthwhile investment.
• Flexible Living Arrangements – Ideal for elderly parents, adult children, or as a rental income source.

Considerations

• Legal Complexity – Without proper documentation, disputes can arise, especially if expectations change over time.
• Council Regulations – Perth has specific building and zoning laws for granny flats, which must be followed.
• Financial Risks – If the occupant contributes to construction costs, there must be a clear exit plan to avoid potential financial losses.
• Relationship Strains – If expectations aren’t well managed, family agreements can sometimes lead to conflicts.

A well-drafted agreement ensures that both homeowners and occupants are protected, helping to avoid financial and emotional stress in the future.

Key Elements of a Granny Flat Agreement

• Occupancy Rights – Clearly define who will live in the portable building and for how long.
• Financial Contributions – Outlines any upfront payments for construction or modifications, as well as ongoing expenses such as utilities and maintenance.
• Property Ownership & Future Changes – States whether the occupant has any claim to the property or if it remains solely under the homeowner’s name.
• Exit Strategy – Defines what happens if the occupant moves out, including financial reimbursement (if applicable).
• Legal Protections – Specifies dispute resolution processes to prevent conflicts down the line.

Many homeowners assume that verbal agreements or informal arrangements will be enough, especially when dealing with family.

However, without a written agreement, misunderstandings can arise, leading to disputes over financial contributions, occupancy rights, or property ownership.

A formal agreement helps:

• Prevent legal and financial conflicts
• Protect all parties involved by ensuring fairness and clarity
• Ensure compliance with Perth’s regulations on property use
• Provide security for both the homeowner and the occupant

Conditions for Building a Granny Flat in Perth

To be eligible, you must meet specific conditions set by the Western Australian Planning Commission (WAPC) and your local council:

• The granny flat must be located on the same lot as the primary dwelling.
• The property must be zoned appropriately for a secondary dwelling.
• The homeowner must ensure adequate access, parking, and essential services (e.g., water, electricity, sewage).

Size Restrictions for Granny Flats

These portable buildings must adhere to size limitations set by local councils and the Residential Design Codes (R-Codes):

• The maximum allowable floor area is 70 square metres (excluding outdoor areas like patios or garages).
• The property must be at least 450 square metres in size.
• There must be adequate outdoor space and setbacks from property boundaries.

Key Regulations and Compliance Requirements

To legally build and use this type of portable building in Perth, homeowners must comply with planning and building regulations.

Zoning and Land Use

Before construction, check with your local council to ensure your land is zoned for a secondary dwelling. Different councils may have additional zoning requirements based on the suburb.

Building Codes and Safety Standards

These portable buildings must meet the National Construction Code (NCC) and Building Code of Australia (BCA) standards, including:

• Structural integrity and fire safety measures
• Adequate ventilation, insulation, and natural light
• Compliance with accessibility standards for elderly or disabled occupants

Permits and Approvals: What You Need Before You Build

Before you start construction, you’ll need to secure several permits and approvals from your local council.

Planning Approval

• Required if your granny flat does not meet standard zoning and setback rules.
• Some councils may waive planning approval for complying developments.

Building Permit

• Necessary before any construction begins.
• Issued by the local council or a private certifier after assessing building plans.

Occupancy Approval

• Once construction is complete, the property must undergo final inspections to ensure compliance.
• A certificate of occupancy is issued once all requirements are met.

At Portable Buildings WA, we bring years of expertise, quality craftsmanship, and an in-depth understanding of local regulations to ensure your project is a success.

With a proven track record in delivering high-quality, compliant, and cost-effective portable buildings, we help homeowners avoid costly mistakes and create functional, stylish, and fully approved living spaces.

Whether you need a custom-built granny flat, assistance with navigating council approvals, or expert advice on granny flat agreements, our team is here to help.

Contact Portable Buildings WA today at (08) 9393 4855 or claim your fast and FREE quote online to save time and money.