Your backyard could be earning you an extra $36,000 a year.
New rental data and planning reforms show granny flats have shifted from family accommodation into serious yield assets, with two bedroom secondary dwellings in Sydney and Melbourne now routinely earning investor grade income.
According to Fundd’s 2025 granny flat guide, typical two-bedroom secondary dwellings in Sydney and Melbourne are now commanding rents of approximately $350 to $600 a week. This pushes potential annual gross income into the $18,000 to $36,000-plus range, depending on location and the quality of the finish.
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The seismic shift is largely thanks to sweeping legislative changes.
In Victoria, planning reforms introduced in late 2023 now allow “small second dwellings” of up to 60 square metres to be built without a planning permit in most residential zones. Crucially, these can now be rented to non-family tenants under standard tenancy law, effectively putting thousands of backyards into play for investors.
Noela and Peter Perkins are ready to move into their new granny flat. Picture: Nigel Hallett
Similar progressive reforms across New South Wales, Queensland, South Australia, and Western Australia have collectively dismantled previous restrictions.
This has repositioned granny flats from limited, family-only accommodation into a dynamic new category of income-producing residential infrastructure.
Against this backdrop, Melbourne-based Maple Property Group is demonstrating the remarkable speed at which private capital is activating this new supply.
The firm recently delivered a fully tenant-ready dual-income property in a blistering four and a half months from client engagement to completion.
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This Victorian project, involving the construction of a compliant small second dwelling behind an existing residential property, is already leased, with rental income commencing immediately upon handover.
“All of our builds are turnkey,” Maple CEO Beau Arfi explains.
“Once construction is complete, tenants can move in straight away.
“There is no waiting period and no grey zone around compliance. The rules are now clear, and people are catching on fast.”
According to Fundd, granny flats have become serious income earners but also helped fill critical market gap.
Maple currently works with more than 1200 clients across Australia and is onboarding up to 50 new investors each month.
Demand is increasingly driven by dual-income strategies rather than traditional buy-and-hold single dwellings.
Around 10 per cent of Maple’s client base is now actively pursuing second-dwelling strategies, a figure that has climbed sharply over the past year as planning reforms have taken effect.
While the regulatory shift has made granny flats investable at scale, execution speed has emerged as the key differentiator in a competitive market.
“Policy has opened the door, but delivery is what solves housing,” Mr Arfi asserts.
“The bottleneck is no longer what is legal. It is how fast quality homes can be built, leased and integrated into long-term portfolio strategies.”
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