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Granny flats in Ipswich have just taken a huge step forward.

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Until recently, they were capped at 50m², one-bedroom designs – hardly appealing for tenants or investors. But with the introduction of the Ipswich City Plan 2025 (July 2025), the rules have changed. Secondary dwellings (granny flats) can now be built up to 120m² with no bedroom limits, creating a real opportunity to boost yields and add long-term value.

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For investors, this means:

• Higher rental income → dual-income properties can often achieve positive cashflow within just a few years.

• Stronger valuations → higher yields directly support equity growth.

• Meeting tenant demand → Ipswich’s vacancy rate is at record lows, with population growth of 3.5% p.a.

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The New Rules at a Glance

A “Secondary Dwelling” is simply a self-contained home on the same lot as the main house. It can be attached or detached, and occupied by related or independent tenants.

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✅ Considered Accepted Development (no DA required, just a building approval via private certifier).
✅ Must provide at least one off-street parking space.
✅ Requires separate waste storage and utility connections (power, water, NBN).

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Size limits by lot size:

• 800m²+ block → up to 120m² (like a standard 3-bed home).

• 600–800m² block → up to 90m² (2–3 bedrooms).

• 450–600m² block → up to 60m² (1–2 bedrooms).

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The Payoff – Why It Works

Take a typical Ipswich property:

• Purchase price: $750,000

• Rent: $580/week → 4% gross yield

Now, add a 2-bed granny flat:

• Build cost: ~$200,000

• Rent: ~$480/week

Combined rent = $1,060/week → 5.8% gross yield.

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In today’s market, dual-income properties in Ipswich often sell on yields as low as 5.2%. That means the same property could be valued at around $1.06M – delivering an instant equity uplift of ~$90,000, plus depreciation benefits.

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Lessons from Our Own Projects

We’ve been building and leasing granny flats in Ipswich for more than a decade. Two examples:

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Bundamba – April 2014

• Shortly after Ipswich City Council’s decision to allow granny flats to be leased separately to the main dwelling we purchased a 3 bed 1 bath weatherboard home on a 610m² corner block for $210k with the intention of adding a granny flat.

• The construction contract for the 2-bedroom brick veneer granny flat was around $125k.

• Current rents are $450/week for the main dwelling and $400/week for the secondary dwelling.

• Current value ~ $850k

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Eastern Heights – April 2016

• We purchased a 3 bed 1 bath home on an 819m² block with good side access for $249k.

• Unfortunately by this time council had introduced the previous restrictive rules so we built a smaller 50m2, 1bedroom granny flat at the rear of the property using a battle-axe layout with separate driveway etc.

• Construction cost was around $115k

• Current rents are $450/week on the main dwelling and $380/week on the granny flat.

• Current value ~ $830k

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How Do We Pay for It?

The good news is that financing a granny flat build is often more straightforward than people expect.

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Most are built under a fixed-price building contract, which makes them eligible for standard construction finance. Here’s what that usually looks like:

• Up to 80% of the “as completed” valuation can be borrowed. Lenders will factor in the value of the existing house plus the new granny flat, not just the land.

• If you’ve had capital growth in the property since you purchased, you may have enough usable equity to cover 100% of the build cost, without tipping in extra cash.

• In many cases, interest is only charged on funds as they are progressively drawn down during construction.

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That said, it’s important to budget properly:

• Extra costs such as utility connections (power, water, NBN), fencing, landscaping, driveway or carport often sit outside the base building contract. These can add $20k–$40k depending on site conditions.

• Holding costs should also be factored in. While the build is underway, you’ll still be covering the main dwelling’s mortgage repayments, so having a small buffer set aside is smart.

The upside doesn’t stop at rental income. New builds also attract significant depreciation benefits, particularly on plant and equipment, which can further boost cashflow in the early years.

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What to Look For in a Granny Flat Property

When searching for the right block, keep these essentials in mind:

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✔ Corner block or good side access
✔ Minimum 450m² block (600m²+ preferable)
✔ Flood-free, relatively flat site
✔ Adequate space for privacy and fencing
✔ Off-street parking for both dwellings
✔ Services (water, power, sewer, NBN) well located

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Final Thoughts

Ipswich is facing a housing shortage, with demand rising and vacancy rates at historic lows. The Ipswich City Plan 2025 has opened the door for investors to build larger, high-quality granny flats that don’t just improve cashflow – they also add long-term value.

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Done right, a granny flat can transform your property into a dual-income asset, strengthen your portfolio, and position you for future growth.

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👉 If you’d like help sourcing a property or implementing this strategy in Ipswich, reach out to the team at Oaklane Property.