Leasing Out Your Granny Flat in Australia: Do You Need a Landlord’s Contract ?
As granny flats continue to grow in popularity across Australia, many homeowners are exploring the idea of leasing them out as a source of passive income. But before you hand over the keys to a tenant, one important question arises:
Do you need a landlord’s contract to lease out your granny flat ?
In most cases — absolutely yes. And here’s why.
Know Your State Rules First
Before diving into tenancy agreements and rent collection, it’s essential to understand what’s allowed in your state.
🔴 Victoria and South Australia currently do not allow homeowners to rent out granny flats as separate dwellings. If you’re located in either of these states, granny flats can typically only be used for dependent family members.
🟢 All other states and territories — including NSW, Queensland, WA, Tasmania, NT, and the ACT — do allow granny flats to be rented out to non-family members. This opens the door to all the typical investment property benefits, such as rental income and associated tax deductions.
Why a Landlord’s Contract is Essential
Whether you’re renting out your granny flat for the short or long term, having a formal tenancy agreement in place protects both you and your tenant. A well-drafted contract covers:
- Rent amount and payment frequency
- Bond details
- Responsibilities for maintenance and repairs
- Rules around notice periods, subletting, and ending the lease
Without a contract, you risk misunderstandings, legal disputes, or challenges enforcing your rights as a landlord.
Using a Property Manager vs DIY
Hiring a real estate agent to manage your granny flat rental can take the stress out of the process. They’ll:
- Advertise the property
- Screen tenants
- Handle the tenancy agreement
- Manage rent collection and maintenance issues
Going it alone? It’s totally doable — just make sure you have the correct paperwork in place.
Here are a few helpful (and free) resources for DIY landlords:
🔹 LawDepot’s Tenancy Agreement Generator
Create customised tenancy agreements online
👉 LawDepot Tenancy Agreement
🔹 Victoria Tenants’ Union – While Victoria doesn’t allow granny flat rentals, the site still offers great general tenancy advice
👉 Tenants Victoria Guide
🔹 NSW Fair Trading – Standard Residential Tenancy Agreement (PDF)
Ideal for NSW landlords
👉 NSW Tenancy Agreement PDF
Don’t Forget: Tax and Legal Considerations
Renting out your granny flat qualifies as investment income, so you’ll need to:
- Declare rental income on your tax return
- Claim allowable deductions (maintenance, insurance, depreciation, etc.)
- Consider potential capital gains tax implications if you later sell your home
It’s always wise to speak with a tax advisor or accountant before leasing your granny flat to understand the full financial picture.
Conclusion: Be Smart, Be Legal, Be Prepared
Leasing out your granny flat can be a fantastic way to generate income and boost the value of your property — if done correctly.
Using a proper landlord’s contract ensures you’re protected and operating within the law. Whether you hire a property manager or go the DIY route, make sure you have all your documents in order and understand your state’s regulations.
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