Is a Granny Flat right for my family?
Historical article – pre-1 November 2025 aged care changes
I have had a number of enquiries recently on Granny Flats arrangements. There can be great benefits from implementing a granny flat arrangement. However, there are also downsides that should be considered before entering an arrangement.
Granny flat interests are usually informal family arrangements where a person transfers money, assets or the title of their home to a family member (or another person). In exchange, they receive the right to accommodation for life.
In real estate terms and in common language, a ‘granny flat’ is a self-contained unit co-located with a private home. However, social security uses the term ‘granny flat interest’ to assess living situations where money or assets have been transferred in exchange for a lifetime right to accommodation.
These elements constitute a granny flat interest:
You pay for a life interest or right to accommodation for life, and
That life interest or right is in a private residence that will be your home.
Granny flat interests are normally established when the relationship between both parties is good. At this point, the parties see mutual benefits in the arrangement and are often blind to the risks or ignore the risks with an attitude of, “it could never happen to me or in my family”.
There are many cases of elder abuse in the courts which arise from granny flat arrangements, and this can leave older parents vulnerable. But problems don’t only occur because of the ill-will of one party. Unforeseen circumstances can also arise. These may include:
The child:
Predeceasing the parent
Becoming unexpectedly and seriously ill or disabled
Facing business failure, bankruptcy or other financial problems
Divorcing and being forced into a property sale
Having an unplanned relocation interstate for work, health, or other family commitments
Not coping with increasing care needs and dependency of an older parent.
The parent:
Needing to move to residential aged care and funding has not been considered
Marrying, and the child does not agree with the relationship
Feeling as though they are not able to live the life they want, or resenting the expectations placed on them.
The reality of the arrangement may also turn out to be different than expectations.
A granny flat arrangement is not something to enter into lightly.
As an Accredited Aged Care ProfessionalTM, I have helped many clients navigate through granny flat considerations.
Call me on 0431 414 799 or email jason@burleyagedcareadvice.com.au to find out how I might help yours or a loved ones’ own position.
This advice is general in nature and everyone’s circumstances are different. So it’s important to speak to someone like myself who is a licenced financial adviser (I am an Authorised Representative of Count Financial Limited AFSL 227232).
