Who rents granny flats, and what are they looking for in a rental property? Understanding your target tenants is one of the most important steps in maximizing the return on your granny flat investment. While granny flats were traditionally built to accommodate elderly relatives, today’s rental market tells a different story. Young professionals, students, couples, retirees, and remote workers are increasingly choosing granny flats because they offer a unique combination of affordability, privacy, and independent living.

For landlords and property investors, identifying the needs and expectations of these tenant groups can lead to higher occupancy rates, longer lease terms, and stronger rental yields. In this article, Prefab Home Kit will examine the most common granny flat tenants, the features they value most, and how you can position your property to attract the right renters and maximize your investment potential.

What is a Granny Flat for Rent?

A granny flat (also called a secondary dwelling or backyard cottage) is a self-contained residential unit built on the same property as a main house. Typically ranging from 40–60 square meters, granny flats include:

• A separate entrance
• A private bathroom
• A kitchen or kitchenette
• One bedroom (sometimes two)
• A living area

Granny flats are standalone structures located in the backyard, offering tenants privacy and independence while remaining part of the main property. They’re popular in Australia, New Zealand, and increasingly in the US and UK as housing affordability challenges grow.

Originally designed for elderly relatives (hence the name “granny” flat), these units now serve a much broader tenant market, including students, young professionals, and retirees.

Pros and Cons of renting a granny flat

Curious about the benefits of renting a granny flat? Discover potential opportunities, including:

Advantages for Tenants

Affordable Rent

Granny flats typically have lower rents than detached houses and many other apartments in the same area. This allows tenants to save a significant amount of money to spend on other essential needs such as food, education, or entertainment.

Greater Privacy

Unlike shared housing, tenants have their own kitchen, bathroom, and living room. This provides a sense of comfort and freedom in their personal lives without being disturbed by roommates and also allows for easier arrangement of the space to their liking.

Lower Utilities and Maintenance Costs

Smaller living spaces often result in lower energy consumption and reduced maintenance responsibilities. Therefore, tenants worry less about high electricity and water bills, as well as expensive repairs, making life easier and less stressful.

Convenient Location

Many small apartments are located in existing residential areas, close to schools, shops, medical facilities, and public transport. This makes it easy to commute to work, entertainment venues, and other amenities without spending too much time, thus improving the quality of life.

Avoiding the Fees and Risks of Apartment Buildings

Unlike renting an apartment in a condominium, granny flats typically don’t have to pay building management fees (strata levies), council fees, and utility bills—costs that are becoming increasingly expensive and driving many apartments up for sale. Additionally, tenants don’t have to worry about noisy neighbors or inconvenient encounters in common hallways, as is often the case in crowded apartment buildings.

A Simple, Minimalist Lifestyle Closer to Nature

Granny flats, with their smaller size, encourage a minimalist lifestyle: fewer possessions, quicker cleaning, and a focus on what truly matters. Many granny flats are located in established residential areas with private outdoor spaces—a small lawn for pets, a patio for sunbathing, or simply the tranquility that city center apartments often lack.

In addition, there are several other notable benefits, such as the ability to negotiate flexible rental prices and the opportunity for a more stable, long-term living situation compared to the apartment market, where tenants often have to move every 12 months.

Disadvantages for Tenants

Limited Living Space

Granny flats are designed to be compact and may not be suitable for large families or tenants who need a lot of storage space. This makes it difficult to arrange bulky items such as bicycles, sports equipment, or large wardrobes, and also makes gatherings with friends or family meetings cramped and inconvenient.

Reduced Outdoor Space

Private outdoor space is often smaller than in detached houses. Therefore, tenants may find it difficult to host barbecues, keep large dogs running around, or garden as they enjoy. If there are young children, they will also lack a safe play area on-site.

Potential for Closer Living with the Landlord

Some tenants may feel less independent living in the same building as the landlord. The landlord’s constant presence right next door can create a feeling of being subtly “monitored,” making tenants hesitant to invite friends over or hold private evening gatherings. In many cases, minor disputes arise due to unclear boundaries between shared spaces.

Parking Limitations

Depending on the house design, private parking may be limited. Without a private driveway or garage, tenants are forced to park on the street – which may be subject to time restrictions or fees. In suburban areas of Australia that rely heavily on cars, this inconvenience significantly impacts daily life.

Who actually rents granny flats?

One of the most common questions landlords ask is: who rents granny flats? 

Young Professionals

Young professionals are among the most common tenants of granny flats. They typically look for affordable, well-located housing close to job centers, while valuing privacy far more than what shared houses or crowded apartments can offer. For this group, a granny flat delivers clear advantages:

• A secluded, self-contained living space – no shared walls, no share kitchen or bathroom, just a private retreat after a long workday.
• Lower rent compared to traditional apartments – in many Australian suburbs, a granny flat can cost several hundred dollars less per week than a one-bedroom unit, freeing up money for savings, travel, or career development.
• Convenient transport and access to amenities – most granny flats are built in established residential areas with bus stops, train stations, cafes, and gyms within walking distance.
• A low-maintenance lifestyle – small yards and compact interiors mean less time cleaning, gardening, or repairing, and more time focusing on work and social life.

Students

University students and international students frequently choose granny flats because they offer both financial breathing room and a sense of independence that dormitories or crowded share houses cannot provide. Students are typically drawn to granny flats for the following reasons:

• Budget-friendly rent – often significantly cheaper than on-campus accommodation or studio apartments, allowing students to stretch their living budget further.
• A quiet study environment – away from the noise of student-heavy share houses, parties, and common walls, helping them focus on assignments and exam preparation.
• Proximity to universities and public transport – many granny flats are located in suburbs with direct bus or train links to major campuses, reducing commute stress and costs.
• Self-contained living – having a private kitchen and bathroom means no waiting for facilities, no conflicts over cleaning rotas, and the freedom to cook and study at any hour.

Couples

Granny flats are an ideal choice for young couples who are saving up for their first home. Without the need for shared living or extreme budgeting, couples can enjoy a comfortable, cozy, and completely private living space. For couples, a granny flat offers:

• Complete privacy – no shared kitchen, bathroom, or living room with anyone, unlike shared living.
• Affordable living costs – significantly lower rent than apartments or detached houses, helping to save faster towards home ownership.
• Comfortable living space for two – not too large to be wasteful, nor too small to feel cramped.
• Low utility bills – thanks to the small size, cooling, heating, and lighting are all much more economical.

Remote Workers

The explosion of flexible and remote work models has created a clear need: a living and working space that is both quiet, comfortable, and separate from the noise of a large household. An annex almost perfectly meets these requirements. Remote workers often look for in an annex:

• A quiet environment with minimal noise – separate from the main house, avoiding the sounds of TV, children, or guests.
• A stable, high-speed internet connection – many annexes have pre-installed fiber optic cables or extended connections from the main house, ensuring uninterrupted online meetings.
• A comfortable home office space – a private workspace can be set up with sufficient lighting and comfortable furniture without affecting the rest area.
• A comfortable and flexible living and working environment – ​​allowing for privacy after work while proactively managing schedules without disturbing anyone.

Vacationers & Tourists (Short-Term)

Tourists and short-term vacationers are increasingly turning to granny flats as a smart accommodation solution, especially when they only really need a clean, safe, and private place to sleep after a long day of sightseeing. While hotels often charge high fees for amenities not everyone uses (pools, restaurants, room service, etc.), granny flats focus on the essentials: a private space to rest at a significantly more reasonable price.

For travelers who only need a place to sleep, have a quick breakfast, and then leave to explore, granny flats are often sought after for the following reasons:

• Significant savings compared to hotels – a night’s stay in a granny flat (especially when booked weekly) can be 30–50% cheaper than a similar hotel room in the area, freeing up budget for food, sightseeing tickets, or souvenirs.
• A clean, private place to sleep – no worries about coming and going in the lobby, no disturbances from noisy guests in the hallway; private, enclosed bed and bathroom – enough for a good night’s sleep.
• Flexible self-catering – with a kitchenette, refrigerator, and kettle, allowing you to prepare your own breakfast or reheat leftovers, reducing the cost of eating out.
• A quiet location near tourist attractions – situated in a residential area, usually just a few minutes’ drive or bus ride from the city center, offering convenience and protection from urban noise.
• No extra charges for unused services – hotels often charge for amenities like swimming pools, gyms, and minibars, while granny flats only provide what’s needed: sleeping space, showers, parking, and internet access.

Features that tenants look for in a rental property

To attract quality tenants and maintain high occupancy rates, landlords should understand the characteristics that tenants value most.

Modern Kitchen and Bathroom: Contemporary fixtures and functional layouts significantly improve tenant appeal.

Private Entrance: Separate access enhances privacy and creates a more independent living experience.

Air Conditioning and Heating: Comfort throughout the year remains a key consideration for most renters.

Fast Internet Connectivity: Reliable internet is increasingly essential for professionals, students, and remote workers.

Adequate Storage: Built-in wardrobes and practical storage solutions can make a small space feel much larger.

Natural Light: Well-positioned windows and open-plan designs help create a bright and welcoming atmosphere.

Secure Parking: Off-street parking can be a major advantage in competitive rental markets.

Energy efficiency: appliances and insulation can help tenants reduce utility expenses while supporting sustainability goals.

Are you considering building a granny flat and investing in rental opportunities on your property? Consult with Prefab Home Kits

Building a granny flat can be a smart investment strategy for homeowners looking to generate passive income, increase property value, and maximize land usage. By understanding who rents granny flats and what tenants expect from a rental property, you can design a space that appeals to your target market and achieves strong long-term returns.

Whether you’re aiming to attract professionals, students, retirees, or couples, investing in a high-quality granny flat can provide a flexible and profitable addition to your property portfolio.

If you’re considering building a granny flat, working with an experienced designer and builder can help ensure your project meets local regulations while maximizing rental potential and future investment returns.

Final Thought

As an Australian granny flat provider, Prefab Home Kit offers a range of thoughtfully designed floor plans to suit different lifestyles, property sizes, and family needs. Depending on your available land, you can choose spacious layouts featuring wider bedrooms for easier movement, north-facing verandas to maximise natural light and energy efficiency, and functional living spaces designed for comfort, accessibility, and everyday convenience.

Get a FREE quote for a granny flat here.

Explore more ideas at our Prefab Home Kits Fanpage.