Granny flats

'Granny flat' is a common term to describe a small, self-contained house.

These are also known as: 

• secondary or ancillary dwellings 
• family flats 
• minor dwellings 
• self-contained small dwellings
• minor residential units.

The Government has committed to amending the Building Act and the resource consent system to make it easier to build granny flats or other small structures up to 60 square metres, requiring only an engineer's report.

Have your say – granny flats consultation

The Government is focused on increasing the supply of affordable homes for New Zealanders. As part of this, the Government is proposing to make it easier to build small, self-contained, and detached houses, commonly known as ‘granny flats’ on properties with an existing home on it.

We are seeking feedback on options to enable granny flats up to 60 square meters in size to be built without needing a building or resource consent. They will need to meet certain building performance and environmental criteria. We want these to be safe, healthy and durable homes.

Have your say: Making it easier to build granny flats (2024) - mbie.govt.nz

Challenges to address

Housing affordability

Aotearoa New Zealand has some of the least affordable housing in the world. Over the 12 months to June 2023, average housing costs per week increased 14.5%. Data from 2023 illustrates that over a quarter of households that do not own their home now spend more than 40% of their income on housing. High housing costs have a greater impact on retirees on fixed incomes, Māori, Pacific people, and people with disabilities.

Increasing demand and lack of supply

In 2018, just under 20% of houses in Aotearoa New Zealand had 2 bedrooms with 6% having 1 bedroom. Demographic changes such as an increase in single parent families, people having fewer children and an ageing population are likely to increase the demand for smaller houses in the future.

Regulatory barriers

Housing has become more difficult and expensive to build in Aotearoa New Zealand. The cost of building a house increased by 41% since 2019.

Regulatory compliance costs for consenting and building are part of what drives housing costs. Compliance costs can be disproportionately high for smaller homes. This has an impact on the number of small houses being built. If costs and processes were less, more smaller houses would likely be built. If more are built, unmet demand would reduce, and the cost of housing would likely decrease. 

What these changes aim to achieve

The outcome of this policy is to increase the supply of houses for all New Zealanders, creating more affordable housing options and choice. 

While these houses can be referred to as 'granny flats', the proposals are not limited to older New Zealanders or family members. 

The principles for achieving this outcome include:

• enabling granny flats and other structures in the resource management and building systems, with appropriate safeguards for key risks and effects.
• coordinating requirements in the resource management and building systems, where appropriate.
• supporting local government funding and infrastructure by ensuring growth pays for growth.

What the current laws say

Housing in Aotearoa New Zealand is largely regulated by two pieces of legislation: 

1. The Building Act 2004 (Building Act) – sets the rules for the construction, alteration, and demolition of new and existing buildings
2. The Resource Management Act 1991 (RMA) - sets requirements for the management of land use and effects on the environment. 

Development may require both a building consent and resource consent, depending on the context. Although they manage different risks and effects, the Building Act and the RMA collectively determine which rules a development is subject to.

Risks to manage

There are risks that have been considered through the development of the policy to enable granny flats and other structures across the resource management and building systems, including: 

• building safety and performance 
• trust in building quality
• environmental effects
• infrastructure planning 
• infrastructure funding
• rating/property information.

Proposal across the resource management and building systems

Building Act

The Ministry of Business, Innovation and Employment has identified a number of options to achieve the objective of making it easier to build granny flats. These include regulatory and non-regulatory options, options that do not require a building consent and fast-tracked building consents. See Appendix 1 of the discussion document for a full description.

The proposed option would establish a new Schedule in the Building Act that provides an exemption for simple, standalone dwellings of up to 60 square metres in size. Compared to the existing exemptions under Schedule 1, the new schedule would have additional criteria to recognise the increased health and safety risks associated with granny flats.

Resource Management Act

The focus of this policy under the Resource Management Act (RMA) is to enable small, detached, self-contained, single storey houses for residential use. Under the RMA, the term 'minor residential unit' (MRU) is defined in the National Planning Standards as "a self-contained residential unit that is ancillary to the principal residential unit and is held in common ownership with the principal residential unit on the same site". The proposal is to focus the policy in the RMA on enabling MRUs.

The proposed option is a national environmental standard (NES) which is regulation under the RMA that can set out rules and standards. Setting out consistent permitted activity standards in the NES will ensure a nationally consistent approach to MRUs. Permitted activity standards could be different in residential and rural zones.

Funding infrastructure 

The proposals would enable a granny flat to be built without needing resource or building consent. These consents trigger the ability for a council to charge development contributions. Councils use development contributions to help pay for the increased demand the new house has on the infrastructure that it provides. This typically includes transport, water, wastewater, stormwater, parks and reserves, and community infrastructure such as libraries.

Māori land, papakāinga and kaumātua housing 

Māori wanting to develop housing often face challenges with the cost and time taken to consent small, simple houses and other buildings. The proposals in the building and resource management systems will go some way to addressing the regulatory and consenting challenges for developing on Māori land, and for papakāinga and kaumātua housing, where the circumstances of these proposals apply.

Resources

The consultation discussion document and supporting fact sheet are available on Ministry of Business, Innovation and Employment's consultation page.

 Making it easier to build granny flats (2024) - mbie.govt.nz

Additional information

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If you have any questions or enquiries, please email building@mbie.govt.nz