Granny flats – You want to buy a flat? Then you should be aware of the advantages and disadvantages of the corresponding apartment or house type. There are many different types of apartments, such as the old building apartment, the loft or the terrace apartment. Here you will be introduced to the frequently used apartment type of the granny flat: This type of apartment is a particularly attractive housing option for families who want to live together in a multi-generational home. Families can live together under one roof, and yet the separate granny flat provides a retreat and an opportunity for privacy in a single-family home. Popular due to low rental and purchase prices, a granny flat is appealing to many people. These are usually found in the basement or attic. What there is to know about granny flats, you can find out here! Back to the overview here: Apartment types.
According to § 11 of the German Housing Act, a granny flat is defined as such if the flat is located in an owner-occupied house and if it is of subordinate importance compared to the main flat. If this subordination does not apply, this is referred to as a two-family house. Even if the granny annexe has to play a subordinate role in the house, the rule applies that the criterion of autonomous running of the household must necessarily be met. If this does not apply, one does not speak of a granny annexe, but of a room rental.
A large and decisive role in the definition plays the apartment access. The apartment access of a granny flat must not be accessible from the outside. The only access to the apartment may be via the staircase or a vestibule. Architecturally, the granny flat is usually located in the attic or basement of the house. Optionally, furnished or unfurnished apartments are offered for rent. This additional payment for furniture can be made as a one-time deduction or included in the rent on a monthly basis. Domestic duties must also be stipulated in the contract, including, for example, participation in garden maintenance or winter service.
Are you looking for a suitable apartment – whether as a tenant or investor? Then take a look at our guide to apartment types A-Z!
Room layout and use: office, hobby room or subletting
Apart from the condition that independent household management is possible in the granny annexe, there are no specific requirements or provisions for the room layout. The size and number of rooms is flexible and individual in each granny flat. The only requirement is the total minimum of 25 square meters. Depending on the agreement between landlord and tenant, the outdoor areas such as garden and terrace can be shared.
Self-employed people can use the rooms in the granny flat as an office or workshop. This way, the workplace is located in one’s own house and yet separated from the living area.
Other possible uses of a granny flat include using the premises as accommodation for guests or using them as premises for hobbies and leisure. Fitness rooms, wellness paradises or hobby workshops are popular possibilities.
Advantages and disadvantages granny flat: price, privacy & cancellation
For both parties, as tenant and landlord, a granny flat brings with it many different advantages and disadvantages. When living together with another household, clear rules must be established and taken into account. In the following two sections we point out various pros and cons of this type of apartment.
Pros: Low price, high retail value & social contacts.
Living in or owning a granny flat brings with it a great number of benefits for both parties. The owners of the house benefit in that money can be made from the otherwise unused space. The extra earnings can be saved and used as retirement savings. This housing option is particularly popular with a multi-generational household. Although the children do not have to move out of the parental home, they are given a great deal of privacy by the granny flat and can live independently.
Higher income can be achieved if the entire house is rented out instead of the apartment and the granny annexe is occupied by the owner. A granny flat also increases the value of the house when it is sold. A granny flat can also offer tax advantages. A reduction in the tax burden and deductible costs are also among the positive aspects.
Apartment hunters find a granny flat to be a cost-effective alternative to a conventional one- or two-bedroom apartment.
Low rental price
Only consideration for a neighbor
Mostly shared use of garden
Often already furnished
Social contact & neighbourhood help
Additional income for the landlord
House has higher sales value
Ideal for several generations living together
Costs can be deducted from tax if applicable
Disadvantages: Lack of privacy, notice period & co.
The biggest disadvantage of a granny flat is the restriction of the privacy of both parties. Both the occupant of the granny annexe and the occupant of the house lose privacy because the entrance to the granny annexe is located in the house and the occupant of the house has to cross the living quarters of the granny annexe each time he or she enters or leaves the house.
It can be problematic for landlords, since a granny annexe has an extended notice period. This can be particularly difficult if there are problems with the tenants or delays in payment.
Limited privacy for both parties
Extended notice period
If necessary, smaller size than normal apartment
Participation in garden maintenance and winter service
Good relationship with the counterparty is an advantage
Rentals & Tenants: Suitable for families, students & single people
Due to the many advantages, granny flats are attractive for many target groups. Especially families of several generations find a granny flat a perfect solution for living together under one roof. Several generations can live under the same roof, but the separate granny flat provides privacy within a household with its separation. Professionals who work privately in a household such as carers or au pairs will find this type of apartment an attractive solution. This would save the commute to work if the employer lives in the same house.
Single professionals: low rent & neighbourhood help
Single people can benefit especially from the lower rent. Young working adults should not be put off by living with another household, but should use this as an opportunity to make social contacts and benefit from communal evenings and neighbourly help.
Students & Trainees: Alternative to WG room & student dormitory
As an alternative to a shared room or a room in a student residence, a granny flat is an option for many students and trainees. Cheaper than an apartment and a greater degree of privacy than in a shared room. Due to the location in the attic or basement, the young adults can retreat to study and enjoy enough free space.
Families of several generations: enough space for several relatives
Families can settle down perfectly in a detached house with a granny annexe. Several generations of a family can live together under one roof and still have possibilities to retreat through the separate apartment. Adult children or grandparents can find a place of privacy and retreat in the granny flat. Another solution for several generations in one house would be a basement apartment. This is located in the basement rooms and is ideal for young adults or even seniors.
What you should consider before buying/renting a granny flat
Before entering into a tenancy for a granny flat, both as tenant and landlord, some important points should be clarified with the other party.
One of these important points are the vulnerable operating costs. It should be noted here that these are only charged as a percentage of the living space. The better alternative would be to integrate a separate water meter as well as gas and electricity meters. Additional costs incurred by repairs carried out by tradesmen are also divided between the two parties. In some cases, there are also additional monthly costs for the landlord’s furniture.
A granny flat in a new development is particularly attractive for purchase. A large number of builders who need capital to finance their own house turn their basement into a basement granny flat and offer it for sale. The purchase price of this is usually in the low price segment and is significantly cheaper than a normal apartment. It is therefore also suitable as an investment for life in advanced age.
Operating costs incurred
Additional costs for a furnished apartment
Purchase recommendation for granny annexe in new development area
A sympathetic appearance and a friendly first impression are particularly important in the case of a granny flat, as you have to live under the same roof as the landlord. Accordingly, you should make a special effort to maintain a well-groomed appearance, a confident presence and good preparation at the viewing appointment. Already in advance, emerging questions should be considered and noted, so that in the end no important point is omitted.
Any personal documents such as identity cards as well as proof of income should also be brought along without being asked. All usable premises should be viewed and best documented by means of photos.
Sympathetic & professional appearance
Any important questions & points should be noted down
Bring personal documents
Documentation through photos
Financing & Investment: Loans, Credits & Equity
The income from renting the granny flat can be used, for example, as financing for the newly built house. Loans from the KfW are granted per residential unit. Since a single-family house with a granny annexe is two residential units, two loans are granted here accordingly. If the house meets the energy standards for energy-efficient construction, a low-interest loan of up to €120,000 can be granted by the KfW.
Checklist for granny flat: rental period, operating costs and co.
Living in a granny flat brings some special points to the fore due to the immediate cohabitation, which must be taken into account. During the inspection of the apartment, relevant questions can be clarified directly with the landlord. During this personal meeting, it can also be determined whether a tenancy is even an option for both parties, since tenant and landlord live together in close quarters.
Here we point out the most important questions you should ask yourself before you sign the lease of the granny flat:
Possible rental period?
Square footage?
Basement or attic?
Access to the apartment?
Furnishing the bathroom?
Kitchen equipment?
Premises to be used?
Separate water meter, gas meter and electricity meter?
Sufficient sound insulation?
Relationship with the landlord?
Furnished or unfurnished?
Contractual domestic duties such as participation in gardening and winter maintenance?
Shared use of household appliances and outdoor areas?
Tips & tricks: sale, rental agreement, financing, taxes & Co.
There is more to buying, selling or renting a property than just raising the purchase price. Selection, valuation, purchase, processing, costs and so many more topics come up. Here you will find a selection of useful information and further articles on the topics of rental/purchase agreements, taxes and the purchase of real estate. Avoid typical mistakes of buyers and sellers with these tips and become successful with your property!
Review Purchase Agreement: Terms & Hidden Costs
In the lease or purchase agreement, all general conditions and terms are stipulated, which both party partners must adhere to in the purchase process.
An important point that must be recorded in the contract is the participation in domestic communal duties. This includes, among other things, participation in garden maintenance and winter service. All costs incurred, including additional costs, the charging of operating costs as well as costs that are added for the furniture of a furnished granny flat. Read more about buying an apartment in this article:
In order to be able to save tax on a granny annexe, the subordination to the owner-occupied home must be clearly recognisable, because the tax advantages in German tax law only apply if it is not a two-family house.
If costs are incurred in the construction of the granny annexe that can clearly only be attributed to the granny annexe, these costs can be deducted from the tax. An example of this is the installation of a kitchen. A reduction in the tax burden can be achieved, but the condition for this is that the rental income is also taxed.
Before it comes to the construction of the house, many builders are first of all before the purchase of a suitable plot of land. If the intention is to buy a plot of land for the construction of a new house, interested parties should make sure that this is really building land and that this is released for building. Various chapters and important information on the purchase of land can be found in the following article:
