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Alternatively, you can add an extension such as an extra room or add a second storey above a garage.

Building above the garage is also known as a Fonzie flat, and in NSW this does fall under different subdivision legislation. If it’s well built, close to public transport, universities and supermarkets, it can be a desirable but small rental home.

According to the research, the top uses for granny flats include additional space for recreation (32 per cent), a home office (25 per cent), additional rental income from tenants or Airbnb (23 per cent), to house aging parents (20 per cent) and so children can stay at home longer (17 per cent.) As granny flats increase in popularity, it’s usual to encounter some common misconceptions about them.

A good guide is to have at least a 450m2 block of land.

Even though you may have the space, it’s important to remember that regulations limit the building of only one secondary dwelling on each lot.

In fact in Sydney’s competitive rental market, granny flats rents average 2.46 per week and are currently attracting a higher rate of growth than houses or apartments .

With the easing of granny flat rental regulations in NSW, WA, NT, ACT and TAS, homeowners can now earn an income by renting out their granny flat.

In NSW, WA, NT, ACT and TAS the timeline for approvals is actually quite compact – much like the size of the property you’re trying to get approved.

Current council approvals average between 6-8 weeks and private certification is as fast as 10 days.

And it looks as though this trend is set to continue.

The customer-owned banking institution Gateway Credit Union recently conducted research that showed one third of homeowners are currently considering the addition of a granny flat, with a further 22 per cent saying that they may consider this in the future.

Alternatively let mum or dad sell their home to fund a classic granny flat in your back yard so they can enjoy independence while gaining your assistance and support as age or health issues catch up with them as well as giving them additional funds to enjoy their retirement.

With the shortage of rental properties in Perth the value of your granny flat is likely to only appreciate the overall value of your property making it far more inviting to large families and investors alike.

However, in NSW, WA, NT, ACT and TAS new planning policies have been introduced to increase the supply and availability of affordable rental housing.