My Account
With the current Unitary Plan now predominantly in place the number of secondary dwellings and minor units are increasing, filling in spare land on properties and unlocking the land’s financial potential.
Many families and couples are taking advantage of the capital in their property, and borrowing to build a secondary dwelling – and I think it’s a smart move.
A secondary dwelling can pay for itself in a very short space of time. Renting out the unit can see a loan paid off quickly (compared to normal mortgage terms) but the real bonuses happen after the loan is cleared. Firstly there’s that extra income coming in, if you keep renting it, helping pay off the main house mortgage or giving you extra funds if you are already mortgage free. Some are even moving into the minor unit and renting out their main house, enjoying the low maintenance and newness of the dwelling and gaining larger income from the main house.
Secondly it provides flexibility – a second space for school leaving children who are more than often staying at home instead of leaving, or, a space for elderly parents. And thirdly it increases value of the entire property for resale should you wish to do so at some point.
Your first step in assessing whether this works for you would be to check what the rules enable you to do, with the council or an independent consultant. Every house has a zone allocated to it, which has its own set of development rules that you must meet. So, it’s important to start at that point.
Secondly meet with a mortgage adviser (even if you have a good relationship with your bank). See what you could borrow, crunch the numbers. Contact a local Real Estate agent to get an idea of the rent you could bring in.
The average 65sqm minor unit should cost between $180,000 and $250,000 depending on the nature of your land and who you build with – it’s a wide cost spread due to a larger number of variables that each site brings. The house and build itself is fairly consistent in cost, but earthworks, drainlaying, Watercare and council requirements vary hugely from site to site. There are more cost effective options that rely mainly on reducing the size of the unit, but 65sqm is typically the maximum if you live in a residential environment.
Your next step would be to approach a kitset company, group housing company or builder to do an assessment of costs. Be careful though that you are comparing apples with apples, and everyone is including the council fees, development contribution, Watercare connection charges and site costs in the overall budget or you might think you are getting the bargain of the century but end up with a nasty surprise.
I have a handy one page costing sheet to allow you to check that the major costs have been allowed for, so give me a quick email (address above) and I’ll send you one to help you decide if this will work for you.
