Big Changes for Small Homes: What the New Granny Flat Law Means for You

In 2025, a major change was announced for New Zealand homeowners — a new law will soon make it much easier to build small standalone dwellings (up to 70 m²) without needing a building consent. The changes will take effect in early 2026, and for many, this could open the door to exciting new possibilities right in their own backyard.

For anyone who’s ever thought about adding a self-contained space — whether it’s for family, guests, or extra income — this new rule could make that dream a whole lot simpler.

The Upside

From my point of view, there’s a lot to like about this. For starters, it cuts out a chunk of the red tape that often slows smaller projects down. That means less paperwork, faster timeframes, and the chance to do something meaningful with your property without getting bogged down in process.

These kinds of small builds can make a big difference. They might create a steady income stream through long-term or short-term rental, provide a comfortable space for ageing parents or adult kids, or even give you a flexible home office that keeps work and home life separate. It’s about adding value and options — both financially and practically — without committing to a major new build.

The Reality Check

That said, there are a few things people should be aware of before jumping in. Small doesn’t always mean cheap. Because these units include a kitchen and bathroom — the most expensive parts of a home — they often end up with higher cost-per-square-metre rates than larger houses.

A recent project of mine was a straightforward 56 m² two-bedroom build with a simple layout, and it still came in around $300,000 — that’s over $5,000/m². On top of that, councils will still charge development contributions, which cover the extra load on local infrastructure like water, wastewater, and roads. These fees vary but can range from $5,000 to $25,000 depending on where you’re building and how big the dwelling is. The same project I mentioned above was billed $25,000 in development contributions by the local council.

There’s also the question of regulation. While the law allows these homes to skip formal consent, you’ll still need to notify the council before and after construction — and the build must be carried out or supervised by a Licensed Building Practitioner. My concern is around oversight: how closely will these builds be monitored, and what’s stopping poor-quality or non-compliant work from slipping through? It’s something the industry will need to watch carefully.

My Advice

Even though this change makes things easier, good design still matters — maybe now more than ever. A clear, well-drawn set of plans benefits everyone: you know what you’re getting, your builder can quote accurately, and the finished product feels cohesive and intentional. You don’t need full consent drawings, but you do need enough detail to guide the process confidently.

At Scott Ede Design, we focus on creating practical, well-considered spaces that work with Central Otago’s landscape and lifestyle — warm, efficient, and built to last.

If you’ve been thinking about adding a small home, studio, or rental to your section, now’s the time to start planning. Let’s chat about what’s possible and design something that fits your site, your budget, and the way you actually live.

FAQs About The New Law

Q: Can I use a small standalone dwelling as a rental or home office?

A: Yes! The new rules aren’t limited to housing older family members. From early 2026, small standalone dwellings up to 70 m² can be used as a rental, guest accommodation, home office, or flexible living space — as long as they meet the simple design requirements and are built or supervised by a Licensed Building Practitioner.

Q: Do planners manage all the consents?

A:  Planners don’t handle everything, but they play a key role. They guide you through site rules, help with resource consent if needed, and ensure your project aligns with council requirements — while your designer or builder takes care of the consent paperwork. Having a planner involved early can save time, prevent costly mistakes, and make sure your build stays on track from the start.

Q: What other potential costs should I plan for?

A: Beyond the main construction costs, there can be a few extras that catch people out. You may need a planning consultant to help gain council approval for where you want to position the structure, or a geotechnical (Geotec) specialist to provide a report on ground conditions — especially important in areas with variable soil or slope. Other possible costs include drainage design, power and water connections, or minor earthworks to prepare the site. These can vary a lot depending on your property, so it’s smart to check early on.

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