Going for a granny flat

Going for a granny flat

Multi-generational living has never been the norm in Australia, but it’s an arrangement that can provide benefits for both the young and the old.

Couples with kids may be attracted by the prospect of childcare on tap, while for older Australians, living alongside their offspring can be a more appealing – and cheaper – option than the retirement home alternative.

With house prices remaining high around the country, the prospect of parents chipping in on a property or making a financial contribution to the household can also hold considerable appeal.

But having mum or dad move in long term is not just a personal choice – it’s also a business arrangement. It makes sense to agree on how you’ll manage a range of scenarios and costs before you call in a builder or start searching for a home with self-contained quarters.

Talking turkey

Deciding what financial or in-kind contribution you want from your olds should be the first step – and talking it through with them the second. Some families may be happy to offer board and lodgings gratis, or in exchange for housekeeping, babysitting, yard work or home maintenance. For other households, a regular cash contribution may be both welcome and necessary. It’s important to ensure both parties are clear about the costs they’re responsible for from the outset, and not wait until the first electricity bill comes due.

Pros and cons of a ‘granny flat interest’

Parents who want to make a lump sum contribution to the cost of a property may wish to do so via what’s known as a ‘granny flat interest’. This is a legal arrangement that entitles your parents to live in your home for life, in exchange for a sum of money. While it may seem an attractive option, particularly if you’re struggling to afford the place you want under your own steam, it does mean you’re obligated to allow your parents to make their home with you for the duration, come what may. Professional advice may assist you to weigh the pros and cons of entering such an arrangement, given it could be tricky to untangle, should either your or your parents’ circumstances change.

Planning ahead

While they may be hale and hearty now, it’s sensible to think ahead to how you’ll cope if your parents’ health deteriorates and they can no longer manage at home. You may also wish to discuss a range of other ‘what if’ scenarios that could affect your shared living arrangement, such as work transfers or relationship breakdown.

Document your arrangement

Documenting your set-up will decrease the likelihood of trouble down the track – whether it’s arguments over who pays the water bill, or working out how your folks will recoup their cash if they’ve chipped in to buy a property and now want out. Include details on how all costs are to be split and what you’ll do if either party wants, or needs, to exit the situation.

In summary, multi-generational living has plenty of benefits, for families that are comfortable with proximity. Clear and open communication to ensure everyone is satisfied with the arrangement you’re entering together is the key to making it work.

 

 

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.