Granny Flats Given the Green Light Under the Building Act 2004

Introduction

The Government is advancing amendments to the Building Act 2004 and the Resource Management Act 1991 (RMA) to allow property owners to develop ancillary residential units, commonly known as ‘granny flats.’ These legislative changes are designed to reduce development barriers, shorten construction timelines, and lower initial costs, all with the goal of boosting housing supply.

With these changes expected to take effect later this year or in early 2026, it is essential to understand both the opportunities presented and the legal and planning obligations that will apply to property owners. This article will consider changes to the Building Act only, but watch this space for a counter-part article which addresses changes under the RMA.

What’s Changing?

The reform strategy aims to remove two legislative barriers for building self-contained units up to 70 square metres (sqm).

Firstly, the requirement for Building Consent will be removed provided that the granny flat:

Has a floor area of up to 70 square metres , eliminating application fees (typically between $5,000 and $15,000) and reducing processing times that have previously delayed projects.
Has a simple design (presumably to limit potential errors arising from complicated building designs).
Complies fully with the Building Code.
Building work is carried out or supervised by licensed building professionals (LBP).
Property owners notify their local council before they start building work by applying for a Project Information Memorandum (PIM) and once building work is finished by providing completion documents, including Records of Work (RoW).

Implications and Opportunities

The Building Act changes, coupled with the RMA changes, are projected to accelerate the rate of housing supply, with estimates indicating that approximately 13,000 additional units could be constructed over the next decade.

For property owners, these changes offer several potential advantages:

Flexible housing: Provision for more accessible housing option for extended family members, including grandparents, young adults, or those requiring specific accessibility or care.
Staff Accommodation: Businesses, particularly in rural areas, may be able to provide staff accommodation.
Visitor Accommodation: Reduced regulatory costs and processing times may increase the feasibility of adding a secondary income source by renting out the granny flat to paying guests, subject to District Plan rules on visitor accommodation.

Compliance and Responsibility

Although the requirement for formal council consent is being removed, safety and quality standards will remain. The key change is that the responsibility for compliance now lies with the property owner and the building professionals involved. This will involve collect and providing to your local council the following, before and after building work starts.

Before building work starts property owners must apply for a PIM, which is used by the council to confirm applicable development contributions and to notify the owner if the land is subject to Natural Hazards (such as flooding or instability), in which case building consent may still be required. Owners have two years from the PIM issue date to complete the construction.

After building work is finished, property owners have 20 working days to give the council all required documents. This includes final design and plumbing/drainage plans, RoWs, gas and electrical safety certificates, and payment of any outstanding development contributions. The RoW proves the work meets compliance standards and may be important for establishing liability, and will be necessary to hold for property resale.

Conclusion

The new consent-free pathway for ancillary dwellings up to 70 sqm has the potential to be a powerful tool for addressing housing shortage in some communities.

Despite fewer regulatory hurdles there is still a need to be diligent. The value of expert advice, and maintaining records has not diminished; it has just shifted to the pre-construction phase. By engaging professionals early to verify boundary compliance, manage liability through LBP documentation, and navigate the PIM process, property owners will be set up to succeed under this new system.

If you’re a property owner and want to know more about how these changes might affect you, then reach out to Simon to discuss how Gallaway Cook Allan can support you.

Disclaimer: This article is general in nature and is not to be used as a substitute for legal advice. No liability is assumed by Gallaway Cook Allan or individual solicitors at Gallaway Cook Allan regarding any person or organisation relying directly or indirectly on information published on this website. If you need help in relation to any legal matter, we recommend you see a qualified legal professional.