Peninsula becoming 'granny flat capital', says Chamber

The Peninsula is becoming the granny flat capital of the Central Coast, according to Peninsula Chamber of Commerce president Mr Matthew Wales.

At the same time, during the past two years, it has experienced a medium density development slowdown, he said.

Mr Wales said onerous medium-density development control plans were the reason for the trend.

He said the evidence was that council had reported no increase in Section 94 contributions during that period.

"Most unit developments on the Peninsula are from older approvals before the Development Control Plans were changed for medium density requirements," Mr Wales said.

He said he believed investors were finding it more lucrative to build granny flats than to build units for sale.

According to Mr Wales, granny flats on the Peninsula were generating investment returns of between five and six per cent.

In most locations a home on the Peninsula with a granny flat would achieve a sale price of around $800,000, Mr Wales said.

High demand for rental properties made it possible to purchase a granny flat, have it constructed and tenanted within 10 weeks.

The investment outlay for an attractive granny flat would be between $120,000 and $140,000 and weekly rentals can vary from $300 to $450 per week.

Weekly rental income on a Peninsula investment property with a granny flat in the back garden could be as high as $800 - a much better return than currently on offer from term deposits or shares.

The popularity of granny flats did have its down side, according to Mr Wales.

It was possible to construct a granny plan without lodging a development application with council under State Environmental Planning Policy (Affordable Rental Housing) 2009.

By providing a granny flat that would be deemed to be affordable housing, all that was required was a complying development certificate, which meant no council involvement.

The need for a development application could be triggered if the person building the granny flat needed to remove a tree or put in drainage, Mr Wales said.

The granny flat tenants put pressure on local roads, town centres, infrastructure and amenities but the development "did not put a single cent into council coffers", he said.

A granny flat was not rated separately, the council did not earn any Section 94 contributions from its development and the developer did not have to provide any parking, he said.

As a snapshot, applications for 20 granny flats on the Peninsula were determined during July 2016.

That's around 240 additional dwellings on the Peninsula per year that did not pay rates.

If council was to introduce a Section 94 contribution of $5000 per granny flat, they would earn $1.2 million per year to reinvest in Peninsula infrastructure.

Interview, 3 Aug 2016

Matthew Wales, Peninsula Chamber of Commerce

Reporter: Jackie Pearson Peninsula News has asked council for verification of the level of Section 94 contributions and medium density development applications and will report its response in the next edition.