Building a Granny Flat: Cost, Value & Rental Income

As property prices climb and multigenerational living becomes more common, South African homeowners are turning to granny flats - compact, self-contained units built on the same property as the main house - as a smart way to unlock space, value, and income.

Whether you're housing elderly parents, adult children, or tenants, a granny flat offers flexibility and financial upside. Here's what you need to know.

💰 What Does It Cost to Build a Granny Flat?

The cost of building a granny flat in South Africa varies widely depending on size, materials, and finishes. Here's a general guide:

Size (m²)	Budget Build (Basic Finishes)	Mid-Range Build	High-End Build
40m²	± R150,000 – R250,000	± R300,000 – R450,000	± R500,000+
60m²	± R250,000 – R400,000	± R480,000 – R700,000	± R800,000+

Factors influencing cost include construction method (brick vs. prefab), roof type, plumbing and electrical complexity, and location logistics.

📈 How Much Does It Increase Property Value?

Adding a granny flat can boost your property’s resale value by 8% to 20%, depending on the suburb, layout, and quality of the build.

• In high-demand areas, buyers are willing to pay a premium for homes with income-generating potential or multigenerational setups.

• In older suburbs, converting unused space (e.g., garages or outbuildings) into flats can modernize the property and attract younger buyers.

Bonus: You don’t need to buy extra land — you’re leveraging what you already own.

💸 What’s the Rental Income Potential?

Granny flats can generate R3,500 to R7,500+ per month, depending on location, size, and amenities.

Area Type	Monthly Rental (Estimated)
Township (e.g., Soweto)	R2,500 – R4,500
Suburban (e.g., Westville, Randburg)	R4,500 – R7,500+
Coastal (e.g., Cape Town, Durban North)	R6,000 – R10,000+

Flats with separate entrances, prepaid meters, and private amenities (bathroom, kitchenette) tend to attract long-term tenants and higher rent.

🛠️ Planning Tips

• Check municipal bylaws: You’ll need approval for a second dwelling, even if it’s on your own land.

• Design for independence: Separate entrances, parking, and alarms make the unit more appealing.

• Future-proof: Consider solar readiness, water-wise fittings, and accessibility features.

🧮 Quick ROI Snapshot

Let’s say you build a 50m² granny flat for R350,000 and rent it out for R5,000/month:

• Annual income: R60,000

• ROI breakeven: ±6 years

• Property value increase: ±R200,000 – R400,000

That’s a solid return - especially when compared to buying a separate investment property.

Final Thoughts

Granny flats aren’t just for grannies anymore. They’re a strategic move for homeowners looking to maximize space, support family, and generate income - all while increasing long-term property value.