Renting a granny flat (ancillary dwelling)
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If you are thinking of renting out a granny flat it is important to understand which tenancy laws may apply as this will determine both your rights and your responsibilities.
In Western Australia, a person renting a granny flat could be a tenant under the Residential Tenancies Act 1987 or a lodger which means common law will apply.
Important points for you to consider before leasing your granny flat
Which law applies
It is not always easy to work out whether a person is a tenant or a lodger but as a general guide, a tenant is more likely to have a right of exclusive possession of the granny flat.
Having exclusive possession means the right to exclude anyone, including the lessor, from the premises. A person can be a tenant even if the right of exclusive possession is only over part of the premises, such as a bedroom or the granny flat portion of a house. An example of exclusive possession is the lessor can only enter the tenant’s space in very limited circumstances, such as to conduct an inspection or perform some repairs, and must give notice before they enter.
A lodger, however, is less likely to have exclusive possession of the premises because the lessor retains charge over the whole premises, including the space in which the lodger resides. In everyday terms, this means the lessor keeps control and authority over the granny flat and can enter it without giving any notice. For example, the lessor might provide services such as cleaning, linen or meals which require the lessor (or their agents) to gain unrestricted access to and use of the granny flat.
For more information read the boarders and lodgers page.
If you are unsure about your arrangement it is important to seek further advice to make sure you are following the correct rules. If you are unsure, it is best to treat the renter as per the Residential Tenancies Act (as a tenant).
It is important to understand it does not matter what you call your agreement, the nature of the arrangements you have entered into determines the type of agreement you have. For example, it will not matter if you call your agreement a lodging agreement if in fact the arrangements you have in place are more like a tenancy agreement.
Ensure the granny flat is approved
A granny flat must have received proper building and planning approval before it is rented out. If you purchased a home with an existing granny flat, you can check your sales documentation or with your local council to ensure the structure has been approved.
Selecting a tenant
As it is likely the lessor will be living next to or in the same premises as the tenant, lessors should take particular care in the selection process.
Get employment and personal references, then follow them up. Obtain photo identification from the tenant. Meet the tenant to get to know them and discuss the property. If a property agent is being used, ask them to check the tenant’s previous rental history.
Being honest and up-front with potential tenants about the positive and negative aspects of the property will reduce the risk of any future misunderstandings.
Boarders or lodgers
If you enter into a lodging agreement, the terms of the contract you enter into should set out all of the rights and responsibilities of each party. For example, some basic matters to cover include:
- how much rent is payable and when;
- each party’s responsibilities for maintaining and cleaning the premises;
- who can enter the premises and when; and
- how and when the agreement can be terminated.
If you enter into a tenancy agreement, the Residential Tenancies Act sets out the rights and responsibilities of each of the parties. The renting section provides useful information to help lessors and tenants in understand the law, including the publications Renting out your property – a lessor's guide and Renting a home in WA – a tenant's guide and videos available on the renting guides and videos page. .
Prescribed tenancy agreements
If you enter into a written tenancy agreement (lease), the Residential Tenancies Act requires you to use the prescribed (standard) tenancy agreement. The clauses in a prescribed tenancy agreement must not be altered. Additional clauses can be inserted in the agreement provided they are not contrary to the Residential Tenancies Act and also comply with the unfair contract terms provisions of the Fair Trading Act 2010.
The tenancy agreement becomes a key document between the tenant and lessor. It covers most of the matters concerning the rental of the granny flat. It is important to ensure tenants understand the provisions in the agreement.
Property condition reports
The Residential Tenancies Act requires a property condition report describing the condition of the premises when the tenant moves into and out of the property. This helps to determine if there has been any damage to the premises during the tenancy and whether the tenant is liable for the damage.
Residual Current Devices (RCDs), smoke alarms and security
Before a premise is leased, lessors must have:
- two RCDs installed on the switchboard, and
- professionally installed hard-wired smoke alarms fitted
More information is available from our smoke alarms and RCDs page.
Premises must also have minimum standards of security including a deadlock on entry doors, lockable windows and a light to the front entry of the premises.
Some granny flats will not have separate accounts for public utilities such as water, gas and electricity. If this is the case, the Residential Tenancies Act has specific rules about the payment by a tenant for their consumption of a public utility.
If the granny flat has a separate sub-meter for the utility, the tenant must be provided with a copy of the account which will set out the tenant’s consumption based on the sub-meter readings and the charges for that consumption.
If there is no separate sub-meter for any of these services, the Residential Tenancies Act requires an agreement to be made in writing about how the tenant’s share of the total consumption charges will be worked out.
The paying rates and utilites page has more information.
Ending tenancy agreements
There are strict rules about ending a tenancy. Depending on the agreement, unless the tenant and lessor can mutually agree to end the tenancy agreement, 60 days’ notice may be needed to end a tenancy or wait until the tenancy agreement expires.
In the case of granny flats, it is important to remember you will probably be living very close to the tenant/lessor and sharing some common areas, such as back yards, driveways and maybe even kitchen space. A tenant or lessor will need to be mindful of this because you are not allowed to end a tenancy agreement simply because you do not like the person or have had a disagreement with them.
It is also important to remember if the tenant is still in the granny flat after they have been served a termination notice, they cannot be evicted without a court order.
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