Small Second Homes in Victoria: Top 4 Things You Must Do Before Building a Granny Flat

The Victorian Government has introduced landmark reforms that make it easier for homeowners and investors to build small second homes in Victoria. Also known as granny flats in Victoria, these dwellings are self-contained, compact, and versatile. For many, they offer a chance to create affordable housing for family members, unlock a new income stream, or add long-term value to their property. But before you get started, there are four essential things you need to do.

The Top 4 Things You Must Do for a Small Second Home in Victoria

1. Confirm Compliance with Size and Design Rules
   Small second homes must be 60 square metres or less and include all the essentials of independent living — a kitchen or food preparation area, bathroom, toilet, and sink. These requirements ensure the home is both compliant and comfortable for future occupants.
2. Check Local Planning and Overlay Restrictions
   In most residential and rural zones, a planning permit is no longer required. However, overlays such as bushfire, heritage, or flood zones may still trigger additional planning conditions. Checking your local council’s requirements is a crucial early step.
3. Secure a Building Permit
   Even if a planning permit isn’t needed, a building permit is always mandatory. This ensures your second dwelling is structurally sound, safe, and legally recognised. Skipping this step risks fines, insurance complications, and compliance issues down the track.
4. Understand the Ownership Rules
   Small second homes cannot be subdivided or sold separately from the primary dwelling. They remain tied to the same lot, functioning as an extension of your existing property rather than an independent title.

From DPUs to Modern Granny Flats in Victoria

These reforms signal the end of the old “Dependent Person’s Unit” (DPU) rules, which previously restricted second dwellings to use by family members in need. Through Amendment VC253, DPUs have been phased out and replaced with a more flexible and modern framework. Existing lawful DPUs remain valid, but any new builds must comply with the updated small second dwelling requirements.

For smaller lots under 300 m², additional siting and design standards under Clause 54 apply, ensuring second homes are integrated thoughtfully within the neighbourhood. While these add another layer of consideration, they still provide a clear legal pathway for owners to build.

Why These Reforms Matter for Victorian Property Owners

By removing the need for planning permits in many cases, the government has opened up an exciting opportunity for more Victorians to build and use granny flats. The benefits are significant:

• New Rental Income: Owners can generate steady returns through long-term tenants or short-stay accommodation.
• Housing Flexibility: Perfect for elderly parents, adult children, or guests, small second homes provide practical, adaptable living space.
• Increased Property Value: Dual-income potential or multi-use design can make your property more attractive to buyers.

Affordable Investment: A granny flat can be an affordable first step into property investment without the cost of purchasing a separate dwelling.

How Certainty Property Helps You Maximise Your Small Second Home

Building a granny flat is only the first step. Managing it effectively is what turns potential into long-term success. Certainty Property specialises in the management of small second homes in Victoria, offering a transparent fixed-fee model that eliminates percentage-based surprises.

We provide comprehensive tenant screening, detailed walkthrough inspection reports, and ongoing compliance management. With national coverage and local expertise, we understand both the legal requirements and the market demand in Victoria.

Conclusion

The reforms surrounding small second homes in Victoria have transformed what was once a complicated process into a major opportunity for property owners. By confirming compliance, checking overlays, securing permits, and understanding ownership rules, you can confidently create a compliant, valuable second dwelling.

With Certainty Property by your side, you won’t just build a granny flat — you’ll unlock a well-managed, income-producing asset that enhances your financial security and your property’s value.