For rental providers and property managers

Renting out a granny flat in Victoria: who pays, what the rules say, and how fast a repair has to happen

Yes, you can rent out a granny flat in Victoria. Since the December 2023 small second dwelling reform, a second dwelling up to 60 square metres on a lot of at least 300 square metres no longer has to be occupied by a dependent relative, and in most residential zones it can be exempt from a planning permit if it meets the siting rules. It still needs a building permit and an occupancy permit. Once tenanted it is a rental property under the Residential Tenancies Act 1997: the rental minimum standards apply, urgent repairs must be attended to immediately, and non-urgent repairs must be done within 14 days of written notice.

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Obligations at a glance

Who is responsible, how long you have, and what it costs

This is the table property managers ask us for. Timeframes come from the Victorian Residential Tenancies Act and the rental minimum standards. Costs are realistic 2026 Frankston and Mornington Peninsula figures for a 35 to 60 square metre second dwelling.

Situation	Who is responsible	Legal timeframe	Typical 2026 cost
Burst water service or a serious water leak	Rental provider	Urgent immediate. Renter may arrange up to $2,500 and be reimbursed within 7 days	$350 to $1,500
Blocked or broken toilet, or no working toilet	Rental provider	Urgent immediate	$250 to $900
Serious roof leak or storm damage	Rental provider	Urgent immediate	$450 to $3,500
Hot water unit failed	Rental provider, essential service	Urgent immediate	$950 to $1,900 electric storage. $1,400 to $4,200 heat pump
No fixed heater in the main living area, or it has failed	Rental provider, minimum standard	Urgent if it is the only heating. Otherwise 14 days	$900 to $3,200 for a compliant split system supplied and installed
Mould and damp caused by a building fault	Rental provider, minimum standard	14 days, urgent if it is a health risk	$450 to $4,500 depending on cause
Mould from the renter never using the exhaust fan	Renter, day to day care	No statutory timeframe. Raise it in writing early	$0 to $450
External door lock not working	Rental provider, minimum standard	Urgent if security is compromised	$180 to $550
Gas safety check by a licensed gasfitter	Rental provider	Every 2 years	$180 to $350
Electrical safety check by a licensed electrician	Rental provider	Every 2 years	$200 to $400
Smoke alarm tested and batteries replaced	Rental provider. Renter must not disable it	Annually	$90 to $180
Damage caused by the renter or their visitors	Renter	By agreement, or a VCAT compensation order	Varies. Bond is capped and rarely covers a real repair
Entry for a non-urgent repair or inspection	Rental provider must give notice	At least 24 hours written notice, 8am to 6pm, not a public holiday	Nil
Entry for a genuine urgent repair or emergency	Rental provider or trade	No notice required	Nil

General guidance, not legal advice. Confirm current requirements with Consumer Affairs Victoria before you act on a specific dispute.

What changed in December 2023, and why it matters

For decades a granny flat in Victoria was a dependent person unit: it had to be occupied by somebody dependent on a resident of the main house, it usually had to be movable, and the council could ask you to remove it when the dependency ended. That made renting one out impossible in most cases. The December 2023 small second dwelling reform replaced that framework. A second dwelling up to 60 square metres of floor area on a lot of at least 300 square metres can now be built in the standard residential zones without a planning permit where it meets the siting and design requirements, and there is no longer a rule tying who lives in it to a family relationship.

Three practical consequences. First, a compliant granny flat in Frankston, Carrum Downs, Seaford or Langwarrin is now a genuine income asset rather than a family workaround. Second, the 60 square metre cap is a real design constraint: a two-bedroom that gets to 64 square metres has just moved into full planning permit territory, which typically adds eight to twelve weeks and $3,500 to $8,500. Third, overlays still bite. Much of the Mornington Peninsula Shire carries design and development, environmental significance, heritage or bushfire management overlays, and an overlay can require a permit even where the small second dwelling exemption would otherwise apply. Our Victorian permit rules page and the Peninsula area page go through this by council.

What has not changed: you still need a building permit, a registered builder, and an occupancy permit at the end. Without the occupancy permit you have an unlawful dwelling, which is unrentable, uninsurable and a serious problem at sale. See the build process page for where each approval sits.

The minimum standards a tenanted granny flat has to meet

Victoria has had rental minimum standards since March 2021 and every one of them applies to a second dwelling exactly as it applies to a house. In a small build the ones that catch owners out are: a fixed heater in the main living area that meets the energy efficiency requirement, a working kitchen with a sink, a stovetop and an oven, a dedicated food preparation area, a bathroom with a shower and a washbasin, a toilet in its own room or in the bathroom, external doors and windows with functioning locks, adequate ventilation to every room, a structurally sound and weatherproof building, and no mould or damp caused by a building fault. Victoria is also phasing in an expanded set of energy efficiency standards covering cooling in the main living area, ceiling insulation, draught sealing, hot water and water-efficient shower heads, applying first to new rental agreements and later to existing ones. Check the current Consumer Affairs Victoria list before you sign a lease, because this set is still moving.

The good news for a new build: a granny flat built to NCC 2022 with a 7-star NatHERS rating clears almost all of the energy standards by design. The problems come from older conversions. A garage or bungalow conversion with no ceiling insulation, no fixed heater and a bathroom that was plumbed by a mate is where a compliance bill of $8,000 to $25,000 appears.

Need a granny flat brought up to rental minimum standards?

We inspect against the current Victorian list and give you an itemised price for the gaps, so a property manager can lease it with confidence.

☎ Call (03) 9022 1391 Book a compliance inspection

Urgent versus non-urgent, notice, and the vacate inspection

Urgent repairs are defined in the Act, not by how annoyed the tenant is. The ones that come up in granny flats are a burst water service, a blocked or broken toilet, a serious roof leak, a gas leak, a dangerous electrical fault, flooding or serious flood damage, and the failure of an essential service or appliance for hot water, cooking, heating or cooling. You must attend to them immediately. If a renter cannot reach you or your manager, they can arrange the urgent repair themselves up to $2,500 and you must reimburse them within seven days of written notice. That $2,500 is why an answered phone is cheaper than a voicemail: a tenant who cannot reach anyone will call whoever answers, and emergency rates run $180 to $320 for the first hour.

Non-urgent repairs start with written notice from the renter, and you have 14 days from that notice to complete the work. Do not treat this as a soft deadline. If it is not done, the renter can ask Consumer Affairs Victoria to inspect and can then take the matter to VCAT, which can order the repair, order compensation, or order a rent reduction.

Entry and access is where granny flats create friction that houses do not. You share a driveway, a bin area and sometimes a clothesline with your tenant. Sharing a yard does not create a right to walk in. Non-urgent entry needs at least 24 hours written notice, has to be between 8am and 6pm, cannot be on a public holiday, and needs a valid reason under the Act. Urgent repairs need no notice. For a property manager, the practical advice is to write the shared-space arrangements into the lease at the start: who mows, which bins are whose, where the tenant parks, and whether the main-house occupants use the path past the flat.

The vacate inspection turns on the condition report. Take the entry condition report seriously, with dated photos of every wall, the floor, the shower, the oven, the window furnishings and the grounds. Bond in Victoria is lodged with the Residential Tenancies Bond Authority and is capped for typical granny flat rents, so it rarely covers a real repair: a $3,000 floor replacement will not come out of a bond. Fair wear and tear is not damage, and a scuffed wall after a two-year tenancy is wear. The argument you can win is the one you photographed.

The money: what it earns, and repair versus capital improvement

In 2026 a one-bedroom granny flat in Frankston, Carrum Downs or Seaford typically lets for $360 to $450 a week, and a two-bedroom for $430 to $540. Mt Eliza, Mornington and Frankston South sit higher, roughly $480 to $620 for a well-finished two-bedroom. Against that, take off management at around 7 per cent, landlord insurance at $250 to $600 a year on top of your home policy, and a maintenance allowance. A realistic annual maintenance figure for a new granny flat is $600 to $1,200, rising to $2,000 or more once it is past ten years old. Our pricing guide and financing page show how that stacks against the build cost.

On tax, the distinction that matters is repair versus capital. Broadly, restoring something to the condition it was in is a repair and is generally deductible in the year you pay it: replacing a few sheets of storm-damaged lining, re-siliconing the shower, fixing a leaking tap. Replacing an entire structure, or improving it beyond what was there, is capital, and building work is commonly written off at 2.5 per cent a year over 40 years, with appliances and other plant depreciated separately over their own effective lives. Repairs to fix damage that already existed when you first rented the flat out are usually treated as capital rather than deductible. There are also rules about the capital gains position when part of your home produces income, and a specific concession for formal written family granny flat arrangements involving an older person or a person with a disability. All of that is general information: your accountant decides your situation, and a decision made on a web page instead of advice is how people lose a main residence exemption.

The honest constraint: when we would tell you not to rent it out

If it has no occupancy permit. Fix the paperwork first. Renting an unlawful dwelling exposes you to council enforcement, an insurance decline and a VCAT claim from the tenant.
If you were going to use it for family within two years. A Victorian tenancy is not easy to end early, and the notice grounds are limited. Use it, or lease it properly, but do not do both.
If short-stay is the plan on the Peninsula. Mornington Peninsula Shire runs short-stay registration and there is now a statewide short stay levy on booking platform revenue. The numbers still work in some spots, but they are nothing like the pre-levy figures people quote. See the short-stay page before you commit.
If the only heating is a portable heater. That fails the minimum standard on day one and a tribunal will not be sympathetic.

Get a price

Get a fixed price to make your granny flat lease-ready

Send the details and we will inspect against the Victorian minimum standards, then email an itemised fixed-price scope within 7 days.

Questions landlords and property managers ask

Can you legally rent out a granny flat in Victoria?

Yes. Victoria replaced the old dependent person unit rules in December 2023 with small second dwelling provisions, so a second dwelling of up to 60 square metres on a lot of at least 300 square metres no longer has to house a dependent relative. It still needs a building permit and an occupancy permit, and in most residential zones it can be exempt from a planning permit if it meets the siting rules. Once tenanted it is a rental property under the Residential Tenancies Act 1997.

How fast do repairs have to be done in a Victorian rental?

Urgent repairs must be attended to immediately, and a renter who cannot reach you can arrange the urgent repair themselves up to $2,500 and be reimbursed within 7 days of giving written notice. Non-urgent repairs must be completed within 14 days of written notice from the renter. If nothing happens the renter can apply to Consumer Affairs Victoria and then to VCAT.

What counts as an urgent repair in a granny flat?

The Residential Tenancies Act lists them, and the ones that come up in granny flats are a burst water service, a blocked or broken toilet, a serious roof leak, a gas leak, a dangerous electrical fault, flooding or serious flood damage, and failure of an essential service or appliance for hot water, cooking, heating or cooling. A failed hot water unit in a granny flat is urgent, and replacement runs $1,400 to $4,200 for a heat pump.

What does a granny flat rent for in Frankston in 2026?

A one-bedroom granny flat in Frankston, Carrum Downs or Seaford typically lets for $360 to $450 a week, and a two-bedroom for $430 to $540. Mt Eliza, Mornington and Frankston South run higher, roughly $480 to $620 for a two-bedroom. Take off about 7 per cent for management, plus landlord insurance of $250 to $600 a year and maintenance.

How much notice do I have to give to enter the granny flat?

For a non-urgent repair or inspection you must give at least 24 hours written notice and enter between 8am and 6pm on a day that is not a public holiday, with a valid reason under the Act. No notice is required for a genuine urgent repair or an emergency. Sharing a driveway or a backyard with your tenant does not create a right to walk in.

Is fixing the granny flat a tax deduction or a capital improvement?

Broadly, restoring something to its previous condition is a repair and is generally deductible in the year you pay it, while replacing an entire structure or improving it beyond its original state is capital and is generally written off over time, with new building work commonly claimed at 2.5 per cent a year over 40 years. Repairs to fix damage that existed when you first rented it out are usually treated as capital too. This is general information only and your accountant decides your situation.