Granny flats vs. home extensions: which one is right for you?

Adding a granny flat or extending your current home can give you a boost of extra space or a nice rental income. Both options have advantages and drawbacks, and choosing comes down to your goals, property and budget. Let’s compare the options to help you decide

DC House Granny Flats

First, let’s define each type of building project.

A granny flat is: a self-contained building on the same property as the home you live in. It can be attached to your house or standalone but needs to have its own private entrance (as well as a kitchen, bedroom and bathroom). Granny flats can be studio-style dwellings all the way up to 3-bedroom homes.

A home extension is: an addition to your house designed to increase its internal size. For example, you could add another storey, or extend the existing floorplan to include more living space, bedrooms, a master suite or a home office. You can add an extension that acts as an extra living space for family, too.

Comparing granny flats and extensions

First, you need to decide why you want the extra space. Are you after:

1. Extra living space

You can extend your home to include a new living zone or build a studio granny flat. Granny flats can double as so many things, including pool rooms, home offices, gyms, storage and playrooms.

2. Passive income

You’d likely want to build a granny flat that has its own private access and is separate from your home (if space allows). Granny flats can have a very small footprint but generate excellent rental yields. They’re also very sought-after when it comes to selling your home and can be a boon for capital growth.

3. Family coming to stay

If you want a permanent place for family to live or guests to visit, you could consider either option. An extension gives you a space under the same roof but can be as separate or as integrated as you like. A granny flat will give you privacy and potentially make the space more usable later as a rental. Granny flats are also more desirable for buyers than one property divided into two homes.

The big factors that influence your choice

Once you know how you want to use your extra space, there are several other factors to consider:

The size and layout of your property and house

If you’re adding a granny flat, you can ask a granny flat builder to come out and measure up your land to find a dwelling size that will fit. Many people are surprised by what can fit on a regular lot in suburbia! Granny flats have a little bit of flexibility in their location, as long as you’re in line with the rules and regulations of your local council.

Adding an extension can be more influenced by your floor plan and the size and layout of your land. It may not be possible to add an extension without removing existing bathrooms, a kitchen, or several load-bearing walls – all of which can add enormously to the overall cost. A renovation specialist will be able to help you design and quote an extension.


All great ideas on paper must eventually come up against the budget. Money determines how big your granny flat can be, how much extra you can add to your existing home, whether you can add another storey and so on.

Start by getting quotes so you have a ballpark figure to play with. Your budget will likely hold one of the biggest votes in the granny flat versus extension debate.

Cost vs return

If you’re considering adding extra space to earn passive income, you need to calculate the cost versus return. How much will the project cost, and how much will you earn each week, month and year? It’s possible a granny flat will earn more than an attached extension since it has more privacy and potential uses.

Getting started

Asking professional builders for a quote is the best way to get started. Our team are specialist granny flat builders and renovators and can visit your property to discuss your options. We can help advise you on layout, cost and answer your questions.

Our quotes and consultations are completely free, and our design and build team can help you make every decision along the way so you’re not alone. You won’t even need to manage the project – we’ll do all that for you. We welcome you to give us a call today.

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