Granny flat ethics explained

According to the Licensed Building Practitioner Code of Ethics, LBPs need to know what building work they are allowed to carry out without consent and act accordingly. As MBIE pointed out last week, that could mean refusing to build small standalone dwellings (granny flats) if they do not meet exemption requirements 

Presenting at PlaceMakers LBP Seminar in Wellington on 11 June, MBIE (Ministry of Business, Innovation and Employment) Senior Policy Advisor Jack Leonard explained the process homeowners and builders will be required to go through to build a granny flat. First, a homeowner will need to apply for a project information memorandum (PIM), which councils are compelled to issue – even if the proposed work falls outside the exemption conditions. 

If proposed building work does not meet the core characteristics of a small standalone dwelling (namely, that is new, standalone, has a 70m2 floor area and is single storey), MBIE said councils can highlight the problems and issue information – but it is up to the homeowner to decide whether to adhere to the information provided.  

“While the owner needs to have a PIM to build an exempt granny flat, the council can’t refuse to issue it. However, the council can issue advice alongside it – such as informing the homeowner that the proposed size of the granny flat does not meet exemption,” said Leonard. 

If a homeowner decides to build a granny flat that does not meet the exemption requirements and attempts to engage an LBP to do so, LBPs would be expected to decline the work. 

“The legislation puts the onus on LPBs to make sure they are not working on projects that are illegal,” added Leonard.  

“The LBP Code of Ethics compels LBPs to make sure the work they are doing complies with the law. If an owner asks an LBP to do something they know is illegal, they need to bring that to the homeowner’s attention and refuse to do the work.” 

This has always been the case for building work that is requested but doesn’t meet Schedule 1 exemptions – but, as MBIE acknowledged, LBPs would be expected to decline work that is not legal.  

Once building work is completed, builders must provide a Record of Work (RoW) to the homeowner, who then provides it to the council, along with final designs. 

LBPs who fail to meet their obligations under the Code of Ethics can be fined up to $10,000, have their licence cancelled, have restrictions placed on the work they can do, or be ordered to pay any costs imposed as a result of the breach. 

Increased liability = increased cost? 

Leonard added that MBIE’s advice to Building and Construction Minister Chris Penk was that builders may charge more to work on a consent-free granny flat than they would to build a comparable size dwelling that does have a building consent due to the additional liability that LBPs will take on. 

MBIE expects the building consent exemption to come into force at the end of 2025 or early 2026 and predicts an additional 13,000 dwellings to be built over 10 years across the whole of New Zealand. 

Resource consent limitations 

While much of the conversation regarding granny flats has centred around building consent exemptions, resource consent exemptions are an important piece of the puzzle.  

Currently, the proposed resource consent exemption sets a limit of one granny flat per property – which means a resource consent would be required, if a homeowner wanted to build two or more granny flats on their land in a residential zone. 

Other proposed resource consent exemptions include: 

• The granny flat and principle residential unit must have no more than 50% site coverage in residential, mixed use or Māori purpose zones. 

• No maximum building coverage in rural zones. 

• Setback of 2m from front, rear and side boundaries in residential zones.  

• Setback of 10m from the front boundary, 5m from side and rear boundaries in rural zones. 

• The granny flat must be 2m from the principle residential unit. 

• Councils are not allowed to apply the following standards to granny flats: requiring individual outdoor space, privacy, sunlight, glazing, parking or access. 

The Government is currently consulting on these changes as part of the broader Infrastructure, development and primary sector national direction consultation. The consultation closes on 27 July 2025. Visit this link to learn more and have your say.