Building a Granny Flat in NZ (2026): A Smarter, Simpler Way to Add Income and Space

If you’ve ever thought about building a granny flat but felt overwhelmed by council consents, delays, or costs, you’re not alone. For years, the idea made sense on paper but felt hard to act on.

That’s changed.

With new rules now in place in 2026, many New Zealand homeowners can build a granny flat up to 70m² without needing resource consent or building consent, as long as certain conditions are met. This is a major shift, and it’s quietly opening the door to new opportunities for homeowners, families, and investors across NZ.

Whether you’re thinking about extra rental income, housing for family, or future-proofing your property, granny flats are now more achievable than ever.

Let’s walk through what’s changed, why it matters, and how to know if it could work for you.

What Is a Granny Flat?

A granny flat (also known as a minor or secondary dwelling) is a small, self-contained, standalone home built on the same property as your main house.

Most granny flats include:

A bedroom
Bathroom
Kitchen
Living space

Despite the name, they’re no longer just for grandparents. Today, granny flats are commonly used for:

Rental income
Adult children saving for their first home
Elderly parents wanting independence close to family
Flexible guest or work-from-home space

What Changed in 2026? (The Big Update Explained Simply)

The government introduced changes in early 2026 to help increase housing supply and reduce unnecessary red tape. These changes affect both planning rules and building consents.

1. No Building Consent (Up to 70m²)

You may not need a building consent if your granny flat:

Is detached and single-storey
Is 70m² or smaller
Has a simple design
Fully complies with the NZ Building Code
Is built or supervised by licensed building practitioners
Is notified to council before and after construction

You will still need a Project Information Memorandum (PIM) and proper documentation — but the full consent process may not apply.

2. No Resource Consent

Under the National Environmental Standards for Detached Minor Residential Units (NES-DMRU), granny flats up to 70m² may also be built without resource consent, as long as rules around are met:

Height
Boundary setbacks
Distance from other buildings
Site coverage

This applies nationwide, although it’s still important to check local district plan requirements.

In simple terms:
If your design and site meet the criteria, you may be able to avoid both building and resource consent.

Why More Kiwis Are Considering Granny Flats Now

1. Extra Income Without Buying Another Property

With rental demand still strong in many areas, a granny flat can provide steady rental income without needing to:

Save another deposit
Buy a separate investment property
Take on a second full mortgage

Many homeowners use this income to help with mortgage repayments or improve overall cash flow.

2. Flexible Living for Family

Granny flats are ideal for:

Aging parents who want independence nearby
Adult children priced out of the housing market
Multi-generational living without overcrowding

You get closeness and support, without sacrificing privacy.

3. Making Better Use of Land You Already Own

Instead of upgrading or buying again, a granny flat allows you to:

Maximise unused backyard space
Add long-term flexibility to your property
Improve overall appeal

While value increases vary, well-designed granny flats are often seen as a positive feature by future buyers.

How Are Granny Flats Usually Funded?

This is one of the most common questions and the answer depends on your situation.

Many homeowners fund granny flats by:

Using existing equity in their current home
Topping up their mortgage
Structuring lending to match staged build payments

Different banks assess granny flats differently, which is why getting advice early can make a big difference to affordability and structure.

Important Things to Know Before You Build

Even without consents, there are still important requirements:

✔ Must comply with the NZ Building Code
✔ Must be built or supervised by licensed professionals
✔ Council must be notified (PIM and records of work)
✔ Water, wastewater, and power connections must be compliant
✔ Development contributions or council fees may still apply

The 2026 changes remove red tape not responsibility.

Case Study: Planning a Granny Flat Under the New 2026 Rules

Background
Sarah and James own a home in Hamilton with a large, flat backyard. They’ve been thinking about a granny flat to:

Create future housing for James’s mum
Keep the option open for rental income later

Before 2026, uncertainty around consents and costs kept delaying the idea.

What’s Different Now
Under the new rules, their proposed build:

A 60m² detached, single-storey granny flat
Fully self-contained
Designed to meet Building Code and NES-DMRU requirements

Because it fits the new criteria, they may not need resource or building consent, provided council notification and licensed supervision are followed.

The Financial Check
Before speaking to builders, they reviewed their numbers:

They had usable equity in their home
Their bank was open to a mortgage top-up
Repayments looked manageable

This gave them confidence to proceed with designs and pricing, without rushing or over-committing.

Where They Are Now (Early 2026)
✔ Initial designs underway
✔ Builder conversations started
✔ PIM and council notifications being prepared
✔ Finance options being structured

They’re planning construction later in the year once everything is confirmed.

Frequently Asked Questions (FAQs)

Do granny flats really not need consent anymore?

In many cases, yes, up to 70m² if all criteria are met. Council notification and compliance are still required.

Can I rent out a granny flat?

Yes, generally granny flats can be rented, subject to tenancy laws and local rules.

Can I sell the granny flat separately?

Usually no. Granny flats remain part of the main property unless the land is subdivided.

How much does a granny flat cost in NZ?

Costs vary, but many builds fall between $150,000 and $250,000+, depending on size, design, and location.

Will banks lend for granny flats?

Many banks will consider lending using equity or mortgage top-ups, but policies differ, structure matters.

Want to See If Building a Granny Flat Is Possible for You?

Before you speak with builders or designers, it helps to understand:

How much you could borrow
Whether your equity is usable
What repayments might look like
How to structure the loan properly

At the end of this page, you’ll find a Quick Assessment Form.

It’s a simple, no-obligation way to:
✔ Check your borrowing position
✔ Understand your options
✔ Get clarity before taking the next step

If a granny flat has been on your mind, this is a great place to start, no pressure, just clear information to help you make the right decision.