‘Granny Flats’ in Victoria: 2026 rules

Last updated October 2026

Victoria’s housing shortage has prompted some of the biggest changes to backyard building rules in years. For most Victorian homeowners, adding a granny flat is now genuinely simpler.

But first, did you know “granny flat” isn’t a legal term in Victoria? Councils and building surveyors approve one of two things: a small second dwelling or a dependant person’s unit (DPU). Which one you build decides who can live there and whether you can rent it out.

Here are the rules as they stand in October 2026:

In this article:

Why build a granny flat?

The reforms have opened up a backyard building to far more Victorians and without the cost and delay that are usually associated with adding a granny flat. Here’s why it helps.

• Keeping family close
  A second dwelling is one of the more affordable ways to house family on the same property, whether that’s an ageing parent who wants to stay independent but close to support, or an adult child finding their feet. It lets generations live together, but separately.

• Caring for older Australians
  For many families, a granny flat means a parent can stay near loved ones rather than moving into aged care, with companionship close by and peace of mind for everyone. It can work the other way, too, as comfortable, independent accommodation for a live-in carer.

• More housing, and more flexibility
  The change is part of the Victorian Government’s goal to deliver 800,000 new homes over the next decade. For homeowners, it means a second dwelling can adapt with your needs over time, such as accommodation for family, as a space to rent out, or for use as a home office or creative studio.

Why did the rules change?

Victoria, like much of Australia, is currently experiencing a significant housing shortage. In September 2023, the Victorian state government responded by releasing its Housing Statement: The decade ahead 2024-2034. By implementing these planning reforms, the government set out to unlock more homes, including by making it far easier to add a second, self-contained dwelling in an existing home’s backyard.

The small second dwelling rules are a direct result. According to the Department of Transport and Planning, around 700,000 residential lots across Victoria could now accommodate a small second dwelling without a planning permit.

What changed in Victoria?

On 14 December 2023, Amendment VC253 introduced a new land-use term: the small second dwelling (the Victorian Government also calls it a small second home). It became the new standard pathway for adding a self-contained second home to a residential block, and at the same time, the older dependant person’s unit (DPU) began to be phased out.

The DPU hasn’t disappeared yet. It remains available under a transitional arrangement until 28 March 2027, and we cover that in a separate guide to building a DPU in Victoria. So, for now, both pathways exist side by side, but most homeowners will build a small second dwelling from here on.

And this change is a welcome one – in most cases, you no longer need a planning permit if:

• your second dwelling is 60m² or less of gross floor area,
• it’s on a lot of 300m² or more,
• it’s the only small second dwelling on the lot, and
• no overlay on your property requires a permit.

That removes one of the biggest hurdles, and costs, of a backyard build.

You will, however, always need a building permit.

Do I need a planning permit for a granny flat in Victoria?

In most cases, no. In a residential zone, a small second dwelling doesn’t need a planning permit if it meets the criteria listed above.

Overlays are the most common reason a permit is still required. If your property is affected by a flood, bushfire (BMO) or other hazard or environmental overlay, you’ll still need a planning permit.

Two other overlays have a useful exception: the Heritage Overlay and the Design and Development Overlay. In either one, no planning permit is required if the building is 5m high or less and finished in muted tones and colours.

Rural zone? In the Farming, Rural Living and Rural Activity zones, you can build a small second dwelling without a planning permit if all the conditions are met. These generally include only one house on the lot, no connection to mains gas, and meeting the required setbacks. If any condition isn’t met, the small second dwelling is prohibited, not just subject to a permit, so check carefully. The Department of Transport and Planning estimates around 2,450 rural lots could accommodate one without a permit.

Lot under 300m²? You can still build, but you’ll need a planning permit. We cover that below.

Overlays and zones vary from property to property, so always check your address first. Before you start, look up your address on VicPlan to see what applies to your land.

Do I still need a building permit?

Yes, always. Both a small second dwelling and a DPU need a building permit in Victoria, whether or not they need a planning permit.

A building permit is issued by a registered building surveyor, who checks that your building meets the Building Regulations and the National Construction Code, covering structural safety and energy efficiency. Victoria adopted the latest code, NCC 2025 on 1 May 2026.

It’s a separate step from planning. Your planning permit, if you need one, deals with whether you can build. Your building permit deals with how it’s built.

For a small second dwelling, there are three extra siting rules. Your building must:

• Sit behind the front wall of the main house
• Have its own private open space
• Have a clear path from the front street to its entrance

It must also be fully self-contained, with a kitchen, bathroom and laundry, and can’t be connected to mains gas. The standard siting rules, such as height, setbacks and site coverage, apply too. It does not, however, require a car parking space.

A DPU goes through the same building permit process and must still meet the NCC requirements, but the siting rules above don’t apply to it. This flexibility is one reason why some homeowners still choose the DPU pathway while it’s open.

Small second dwelling vs DPU: what’s the difference?

It’s essential to understand the difference, because each has its own rules that determine everything from size to who can live there.

Anyone can live in a small second dwelling, including a tenant, so it can be rented out. It must be no more than 60m² in gross floor area, but it doesn’t need to be movable.

A DPU can only house someone who depends on a person living in the main house, like an ageing parent or a family member who needs support, so it cannot be rented out. It can be larger than 60m², but it must be movable, which Victoria’s planning schemes define as “designed to be moved from place to place on more than one occasion”.

Here’s how they compare at a glance:

* The DPU clause doesn’t set a size limit, but the unit must genuinely be a movable building. Councils have challenged large DPUs on that point, so confirm your design with your building surveyor early.

**Overlays such as bushfire or flood can still trigger a planning permit for either.

The simple test: if you want to rent it out, you need a small second dwelling. If it’s for a dependent family member and you’d like it bigger than 60m², a DPU may suit.

However, the window to build one is closing.

Can I still build a DPU in Victoria?

Yes, but not for much longer. The DPU pathway closes on 28 March 2027. After that, you can’t start the approval process for a new DPU.

A DPU suits a specific situation: housing a family member who depends on someone in the main house, in a building that can be larger than the 60m² small second dwelling cap and doesn’t have to follow the same siting rules. The catch is that a DPU can’t be rented to anyone else. Once it’s no longer used by a dependant, it must be removed or converted to a small second dwelling.

To build one, you need the approval process underway before the deadline. That means a planning permit application lodged, a building permit issued, or a building surveyor appointed (with the building permit issued by 28 June 2027). Approvals take time, so the real deadline to start is well before March 2027.

If a DPU might suit your family, we’ve covered the closing window in full in our guide to building a DPU in Victoria.

What if my block is under 300m²?

You can still build a small second dwelling, but you’ll need a planning permit.

On smaller lots, your application is assessed against Clause 54 of the planning scheme, which covers things like setbacks, daylight, overshadowing and overlooking. Clause 54 was updated by Amendment VC282 in September 2025.

The good news: if your design meets the specified Clause 54 standards, the application goes through VicSmart. This is a fast-track process with no public notice, and council is required to decide within 10 business days.

Can I rent out a granny flat in Victoria?

A small second dwelling, yes. A DPU, no. It can only house a dependant.

So if renting is your goal, build a small second dwelling. But before you count on the income, there are two costs worth knowing about.

Short-stay levy. Since 1 January 2025, Victoria has charged a 7.5% levy on stays under 28 days. It applies to small second dwellings, even on your own home block, so factor it in if you’re thinking Airbnb or holiday lets.

Land tax. If you rent out a small second dwelling, the part of your land it sits on can lose its main-residence exemption, and land tax may apply. Family members who only chip in for bills don’t count as paying rent.

One more thing to keep in mind: a small second dwelling can’t be subdivided or sold separately from the main home. It’s a long-term addition to your property, not a standalone asset.

Building your granny flat with Greenspan

If you’re looking to take advantage of the new relaxed rules, there’s no need to make the building itself difficult. A PreCrafted Greenspan building gives you a granny flat designed around your property, built faster and with less hassle.

A faster timeline.
Because our buildings are PreCrafted off-site using precision processes, they go up more quickly than a traditional build. Your granny flat can become a reality in a matter of weeks, not months.

A design that’s yours.
Our designs can be modified and personalised to suit your property and style, from the size and layout to the cladding, windows, doors and finishes. Our largest standard Melwood sits comfortably under the 60m² small second dwelling cap.

Precision and quality.
Our modular panels are handcrafted to millimetre precision in our Sydney workshop, using high-quality timber suited to the Australian climate. The result is a structurally solid building that assembles cleanly on site and is built to last.

Delivered and installed with minimal fuss.
The panels are delivered to your site* ready to assemble – often in less than a day for smaller structures, or up to a week for around 60sqm buildings – with far less disruption than a conventional build and, in most cases, no major earthworks.

Relocatable.
Our buildings are designed to be assembled and, if needed, either craned as a complete building into a new location or disassembled and rebuilt elsewhere.

What we supply, and what you arrange.
Your Greenspan building is delivered ready to install to lock-up stage. To meet the small second dwelling definition, you’ll arrange the kitchen, bathroom and laundry fit-out, plus your building permit through a registered building surveyor. We can help put you in touch with relevant professionals to assist with all stages.

The Greenspan way.
With 50 years of experience behind us, our team is here to guide you through the process, from design to delivery.

*Delivery is to the last point of delivery vehicle access.

This article provides general information only and does not constitute planning, building, legal or tax advice. Always confirm the requirements for your specific site with your council and a registered building surveyor.