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Granny Flat Council Rules Simplified: Your Easy Guide to Building One in the Illawarra

Joel Hynes
1 day ago
3 min read

Thinking Granny Flat? Let's Break It Down (Without the Legal Headache)

Granny flats used to mean nanna out the back. Now? They're a smart move for extra income, housing a family, or boosting your property's value. But navigating council rules, approvals, and red tape can feel like you need a law degree.

Fear not! Here's a straightforward, no-jargon guide to Illawarra granny flat rules so that you can plan your build without the headaches.

What Is a Granny Flat Anyway?

✅ A self-contained secondary dwelling on the same block as your main house. ✅ Max size in NSW: 60 square metres of internal floor space. ✅ Must be on the same title as the primary residence (no subdividing). ✅ Can't be strata titled or sold separately

Think of it as a mini home: bedroom(s), bathroom, kitchen, living space—just smaller, but packed with potential.

Key Granny Flat Rules in the Illawarra (Wollongong, Shellharbour & Shoalhaven)

📐 Minimum lot size

Most zones: 450m² lot required
The block must be large enough to accommodate both dwellings, Parking, and open space.
Some smaller lots might be possible with council DA (development application)

🛠 Approval pathways

Complying Development Certificate (CDC) – Fast-tracked approval if your design meets set criteria. Often approved in as little as 2-4 weeks.
Development Application (DA) – Needed if your site has constraints (heritage, flood zone, bushfire risk). Takes longer: 6–12+ weeks.

🚗 Parking

Granny flats are exempt from requiring extra off-street Parking by law under CDC rules, but good luck finding a tenant if Parking is a nightmare!

📏 Setbacks

Front: Must meet main dwelling setbacks
Side/rear: Min 3m from rear boundary, 0.9m from side boundary in most cases

🏡 Design rules

Must have its entry
Must maintain a private open space for both dwellings
Services (water, sewer, power) must be properly connected.

What About Renting It Out?

✅ Yes—you can rent your granny flat to anyone (not just family)

✅ No restrictions on rent amount or lease length

✅ Granny flats make great long-term rentals, or Airbnb (check local short-stay rules first!)

Fun fact: The Illawarra's tight rental market means granny flats often fetch $350–$500 per week, depending on location and quality.

Common Pitfalls to Avoid

⚠️ Wrong zoning – Not all blocks are zoned for secondary dwellings. Always check before you plan.

⚠️ Too big, too close, too fancy – Designs that ignore size limits, setbacks, or overshadowing rules will get knocked back.

⚠️ Flood/bushfire land – Adds extra hoops, reports, and costs.

⚠️ Trying to sell separately – Granny flats can't be sold off—they stay part of your property title.

Granny Flat Pros and Cons (Let's Keep It Real)

✅ Pros	⚠️ Cons
Generates rental income	Upfront cost ($120k–$250k+)
Adds property value	May reduce yard space/privacy
Good for multi-gen living	Can affect insurance premiums
Flexible: rent out / home office/guest space	It can complicate resale if buyers are not interested in one.

Ready to Build? Your Checklist

✔ Confirm lot size + zoning

✔ Decide: DA or CDC pathway

✔ Get plans drawn by a licensed designer or granny flat specialist

✔ Check utility connections

✔ Get quotes + compare builders✔ Lodge approval + watch your dream take shape

Conclusion: Granny Flats Made Simple(ish)

Building a granny flat in the Illawarra isn't as daunting as it sounds—if you know the rules. Done right, it's a wise, flexible investment that can future-proof your property and help ease the housing crunch (while boosting your bank balance).

So, whether you're planning for income, in-laws, or Insta-worthy guest stays, check your council rules and build it right the first time!