The costs of building a granny flat that you might not know about

When people start looking at building a granny flat, one of the first questions they understandably ask is: “How much will the house cost?”

It’s an important question. But it’s not the only one.

The cost of the home itself is only part of the overall project. Depending on your property, you may also need to allow for things like geotechnical reports, engineering, drainage, power, water, site works and council fees.

Some properties need very little additional work. Others can be more complicated.

That’s why one of the most important things we do at NZ Granny Flats is look at the whole property, not just the home you’d like to build.

I’d much rather have an upfront conversation about something that might cost extra than have a customer get halfway through a project and discover a bill they weren’t expecting.

So, what are some of the costs you need to think about?

1. Geotechnical reports and foundations

Before you build, we need to understand what’s happening underneath the home.

A geotechnical report looks at the ground conditions on your property and helps establish what sort of foundation will be required. As a guide, a geotechnical soil report may cost around $550–$1,500.

On a straightforward site, the standard foundation for your chosen home may be suitable.

But Canterbury has plenty of TC2 and TC3 land, as well as properties where liquefaction risk, soil conditions or other site-specific factors mean an engineered foundation is needed.

That can mean additional engineering design, materials, inspections and sign-off. The actual cost will depend on the property – particularly things like the depth and type of piles required.

This is exactly why we don’t like making assumptions before we’ve looked at your site.

2. Surveying and working out exactly where the home will sit

Putting a granny flat in the backyard isn’t simply a matter of choosing a clear patch of lawn.

We need to understand your site levels, boundaries, setbacks and the proposed location of the new dwelling.

Depending on the property, this can involve site levels or a building location certificate. Our current indicative costs range from around $610 for rural site levels to approximately $800–$1,600 for a residential building location certificate and levels.

It’s not the glamorous part of building, but getting this right at the beginning can save a lot of trouble later.

3. Plans, design work and changes

If you choose one of our existing homes without significant changes, much of the design work has already been done.

If you need a completely new design, however, there will be additional architectural and documentation costs. As an example, our current allowance for a straightforward new design of up to 70m² is $5,950 + GST, covering the process from concept design through to working drawings and the relevant application documentation.

Changes to an existing design can also create additional costs, particularly if they require plans to be redrawn or other consultants to become involved.

This is one reason we spend time with customers early on working through what they actually need. It’s much easier – and usually much less expensive – to make good decisions before detailed design work begins.

4. Sewer, wastewater and stormwater

This is an area people often don’t think about until they start getting serious about building a granny flat.

The new home needs somewhere for wastewater to go, and the solution can vary a lot from property to property.

If you’re on town sewer, we need to establish where the existing drains are, how far away they are and whether there is enough fall to connect the new home naturally. If there isn’t, pumping may be required.

On rural properties with septic systems, we need to know whether the existing system was designed and consented for the additional bedrooms and occupants. If it wasn’t, a new or upgraded septic system may be needed.

A new septic tank and effluent field can start at around $22,000, with difficult ground conditions such as heavy clay potentially adding to the cost.

Stormwater also needs to be considered. Depending on the site, this may involve connecting to an existing system or installing soakpits, with the suitability and cost affected by your ground conditions.

It’s one of those areas where two properties that look very similar above ground can have completely different requirements underneath.

5. Getting power to the new home

Power is another cost that is difficult to put a standard figure against.

We need to look at where the granny flat will get its supply from, how far the cable needs to travel, whether you have single or three-phase power and, in some cases, whether the existing network infrastructure has enough capacity for another dwelling.

The connection might come from the main house, a boundary box or directly from a pole.

There are also different cable and trenching requirements depending on the site, which is why electrical connections need to be assessed individually rather than simply included as a generic allowance.

6. Water supply

If you’re on town water, connecting the granny flat may be relatively straightforward.

On a rural property, there can be more to consider.

Where does your water come from? Is the existing supply adequate for another household? Will you need additional tanks? Is a pump required? If the property is supplied by a well, potable water testing may also be required.

These aren’t things we expect our customers to already know. That’s our job.

We can bring the right tradespeople into the conversation and help work out what your particular property needs.

7. Fire and Emergency requirements

This one can come as a surprise, particularly for people building on rural or lifestyle properties.

A new dwelling needs to be accessible to emergency services and there needs to be an adequate water supply available for firefighting.

In urban areas with suitable reticulated water and good vehicle access, there may be very little additional work required.

On some rural properties, however, requirements can include dedicated firefighting water storage, appropriate connections, vehicle access and a suitable hardstand area for fire appliances.

The important thing is not to assume. Requirements vary depending on your location and your site, so we look at them as part of understanding what may be involved in building on your property.

8. Council development contribution levies (DCL’s)

This is one of the bigger potential costs that can catch people by surprise.

Development contributions are charges councils can make when a new dwelling creates additional demand on things such as roads, water and wastewater infrastructure, stormwater systems, reserves and community facilities.

And there isn't one Canterbury-wide figure.

The rules and the amount you may have to pay depend on which council your property is in, where within that district you live and exactly what you're building.

In Christchurch, for example, a small standalone dwelling or granny flat is considered a development under Christchurch City Council's Development Contributions Policy and is assessed for development contributions. The amount isn't simply a standard granny flat fee – Council assesses the development and the infrastructure demand associated with it. Christchurch City Council also applies an adjustment to some smaller residential units, so the characteristics of the dwelling can affect the final assessment.

Selwyn operates differently again. Selwyn District Council states that a second dwelling or family flat triggers a development contribution assessment, although discounts can apply depending on factors including the size of the new dwelling, whether it is attached to the existing home and the size of the property.

The charges themselves can be made up of several components. In Selwyn, for instance, different contributions apply for things such as roading, reserves, community infrastructure and, in some locations, stormwater. Some are district-wide while others relate to particular development areas, which means the location of your property can make a significant difference to the amount payable.

Waimakariri has another approach. Its guidance says secondary dwellings or granny flats are generally not subject to development contributions unless additional service connections are required, but an additional dwelling that doesn't meet the Council's definition of a minor residential unit can attract them. Contributions also vary across different parts of the district.

So this isn't a cost where I'd suggest relying on a rough figure you found online or what somebody else paid for their granny flat.

Depending on your council, location and the infrastructure involved, the contribution could be relatively modest – or it could add thousands, and potentially tens of thousands of dollars, to the project.

It's something we want to establish as early as possible.

When we're assessing your property, we'll look at which council rules apply and whether development contributions are likely to form part of your overall project cost. Where necessary, we can also obtain an estimate from the relevant council so you have a much clearer picture before making your final decision.

9. Council and other professional fees

Development contributions aren't the only council-related costs you may encounter.

There may also be application, assessment or processing fees payable to your local council, along with fees for surveyors, engineers or other professionals required for your particular site.

Exactly what applies depends on the property, what you're building and which approval pathway the project falls under.

Even where a granny flat qualifies for an exemption from requiring a building consent, that doesn't mean there are no rules, paperwork or other costs involved. Christchurch City Council, for example, makes it clear that exempt granny flats can require a Project Information Memorandum, development contribution assessment and completion documentation.

That's an important distinction, and one we'll help you understand.

So how much should you allow?

Unfortunately, there isn’t one magic number.

And I’d be wary of anyone who gives you one without knowing anything about your property.

A flat urban section with existing services nearby is a very different project from a rural lifestyle block requiring a new septic system, water storage, a long electrical connection and additional engineering.

The home might be exactly the same. The cost of getting it onto the property can be very different.

Our approach: work it out before you commit

For me, this comes back to good customer service.

People should know what they’re getting into.

We don’t want to sell you a home at an attractive price and leave you to discover all the other costs afterwards. We want to understand your property, identify the things that could affect your budget and give you as clear a picture as we reasonably can before you make a decision.

Sometimes that means telling someone their site is going to cost more than they hoped.

I’m okay with that.

I’d much rather have an honest conversation at the beginning than have someone feel they’ve been caught out later.

Building a granny flat is a significant investment. You deserve to understand where your money is going – not just what the home costs, but what it will realistically take to build it on your property.

Thinking about building a granny flat?

Start by talking to us about your property and what you’re hoping to achieve.

We can help you understand the likely site requirements, the questions that need answering and the costs you should be thinking about before you take the next step.