No specific financing available for granny flats 

Three major banks have confirmed to Under Construction that there is no granny flat-specific financing available to homeowners 

The Government has enabled homeowners to build a detached minor residential unit (granny flat) of up to 70m2 without consent as long as it meets certain conditions, saying it will boost productivity in the construction sector and give New Zealanders more options to make use of their land and provide a range of options for families. 

“For whanau that need housing immediately, allowing granny flats to be readily available is a commonsense decision,” said Associate Finance Minister Shane Jones. “These changes allow homeowners to have a range of options available to them and I look forward to seeing the boost in productivity in the construction sector this will bring.”

Big costs for small dwellings 

However, estimates put together by Sonder Architecture suggest a basic prefab granny flat could cost between $260,000 – $350,000, while a custom build could cost between $380,000 – $500,000. 

Granny flat specialist builders Build Mac estimates that in Hawke’s Bay, the average cost for a 70m2 granny flat is from $2,800 – $3,700 per m2. That puts a high-spec build at $250,000+. A quality fitout could add $50,000 to the final bill, adds Build Mac, while base pricing often doesn’t include elements such as siteworks, driveways, paths, decks or finance costs. 

Whether homeowners can access the money required to build a 70m2 granny flat will depend on a range of factors. However, none of the three major banks Under Construction contacted said they offered special finance packages for granny flats, nor were they considering offering them to customers. 

No bespoke offering 

Adam Boyd, ASB Executive General Manager of Personal Banking said that ASB has a range of options to assist customers who are building a detached minor residential unit or granny flat. 

“Customers most commonly fund a granny flat by topping up their existing ASB home loan. This could be advanced in a lump sum, drawn down progressively or accessed via a revolving credit facility. We encourage customers to talk to us before they get started to understand which option works best for them based on their needs. Our standard lending criteria applies.” 

He added that it’s too early to say how significant a share of New Zealand’s housing market granny flats will become. 

An ANZ Spokesperson told Under Construction that customers who wanted to build a granny flat could access financing through its Blueprint to Build package, which provides home loan interest rates discounts and fee savings for eligible customers and projects. 

“Benefits include a 1.25% per annum discount on floating home loan rates and a 0.60% per annum discount on fixed rates for new fixed-rate periods. We will also waive fees on a customer’s ANZ personal credit card, Flexible Home Loan account and ANZ Freedom account,” said the spokesperson. 

Westpac NZ Head of Consumer Lending and Insurance Product, Jo McGregor said Westpac was “committed to helping New Zealanders realise their aspirations for their homes”.  

“People can finance minor dwellings through our standard loans process,” he added. “We do also offer home loans on pre-built homes. Depending on the scale and scope of the project, people can apply through a number of loan categories, including for construction or renovation.”