How to Develop Your Backyard: Dual Occupancy Guide NSW

Dual occupancy, adding a second dwelling to your property, is one of the most accessible forms of property development in NSW. Whether you want rental income, accommodation for family, or to unlock your property’s value, this guide explains how dual occupancy works and how to get started.

What is Dual Occupancy?

Dual occupancy means two dwellings on one lot of land. The dwellings can be:

Attached: Two dwellings sharing a common wall (like a semi detached pair)

Detached: Two separate buildings on the same lot (main house plus secondary dwelling)

Both dwellings are self contained with their own kitchen, bathroom, bedroom, and living areas. They can share driveways and outdoor spaces but function as independent homes.

Why Consider Dual Occupancy?

Financial Benefits

Rental Income: A second dwelling generates ongoing income. In Sydney, secondary dwellings can achieve $400-800+ per week depending on location, size, and specification.

Property Value: Two dwellings on one title typically increases land value beyond the cost of construction. You’re essentially creating value from underutilised land.

Development Profit: Some owners build then sell (subdivision may be possible), capturing development profit rather than paying developer margins.

Lifestyle Benefits

Multi-Generational Living: Accommodate aging parents, adult children, or extended family with privacy and independence on both sides.

Work-From-Home: Dedicated separate space for home based business or professional practice.

Future Flexibility: Build now, occupy later. Create your future downsizing option while generating rental income in the interim.

Types of Dual Occupancy

1. Attached Dual Occupancy

Two dwellings sharing a common wall, typically built as a single structure that looks like one large home or explicitly designed as a semi detached pair.

Characteristics:

• Single building footprint
• Shared roof structure
• Common wall (fire rated)
• Separate entrances
• Usually 2 to 3 storeys

Best for:

• Maximum site utilisation
• Narrow lots
• Corner sites
• New construction (knock down rebuild)

2. Detached Dual Occupancy

Two separate buildings, typically existing house plus new secondary dwelling in the rear yard.

Characteristics:

• Two distinct structures
• Independent construction
• Can retain existing house
• Second dwelling typically smaller
• Various configurations possible

Best for:

• Retaining existing main dwelling
• Larger lots with rear yard space
• Gradual investment approach
• Maximising privacy

3. Secondary Dwelling (Granny Flat)

A specific form of detached dual occupancy with size limitations but simpler approval.

Characteristics:

• Maximum 60m² floor area
• Must be on same lot as main dwelling
• Single storey only
• Complying development pathway available
• Less complex approval process

Best for:

• Smaller budgets
• Simpler projects
• Quick approval needed
• Modest rental income target

Approval Pathways

Complying Development Certificate (CDC)

For Secondary Dwellings (Granny Flats): The fastest approval pathway, as little as 10 business days.

Requirements:

• Maximum 60m² internal floor area
• Single storey
• Not heritage listed property
• Meets setback and height requirements
• Not flood affected

Process:

1. Engage private certifier
2. Lodge application with plans
3. Certifier assesses compliance
4. CDC issued if compliant

LMR CDC Pathway

For Larger Dual Occupancies: If your property is in an LMR eligible area (171 designated suburbs, within 800m of station), larger dual occupancies can use the fast track Pattern Book CDC pathway.

Benefits:

• 10 business day approval
• No neighbour notification
• Pre approved designs
• Greater flexibility than standard CDC

Requirements:

• LMR eligible site
• Pattern Book compliant design
• Private certifier assessment

Development Application (DA)

For Everything Else: Larger or more complex dual occupancies outside LMR areas typically require traditional DA approval.

Timeline: 3-12 months depending on council and complexity

Process:

1. Design documentation
2. Lodge with council
3. Neighbour notification period
4. Council assessment
5. Determination

Site Requirements

Minimum Lot Size

Requirements vary by council and zone:

• R2 Low Density: Often 450-600m² minimum
• R3 Medium Density: Often 300-450m² minimum
• R4 High Density: Often 300m² minimum

Check your council’s specific requirements or rely on professional assessment.

Lot Configuration

Width: Minimum frontage requirements apply (typically 12 to 15m for dual occupancy)

Shape: Regular shapes simplify design; irregular lots may limit options

Access: Both dwellings need adequate access, especially for detached configurations

Existing Structures

Retain or Demolish?

Factors to consider:

• Condition and value of existing dwelling
• Position on lot (affects new dwelling options)
• Heritage or character considerations
• Financial comparison (retain vs knock down rebuild)

Site Constraints

Common Limitations:

• Easements (drainage, sewer, power)
• Flood affectation
• Bushfire risk
• Heritage listing
• Tree preservation orders
• Overshadowing requirements

Design Considerations

Orientation and Layout

Northern Aspect: Position living areas for northern sun. This affects both dwelling quality and BASIX compliance.

Privacy: Design to minimise overlooking between dwellings and to neighbours. Window placement, screening, and landscaping matter.

Access: Both dwellings need practical access. Consider:

• Separate driveways or shared?
• Pedestrian access
• Service access (bins, maintenance)
• Emergency access

Parking Requirements

Typical Requirements:

• 1-2 spaces per dwelling
• Often requires garage or carport
• Visitor parking may be required
• Tandem parking sometimes acceptable

Private Open Space

Each dwelling typically requires private outdoor space:

• Minimum area (varies by council)
• Minimum dimensions
• Direct access from living areas
• Usable grade

BASIX Compliance

NSW sustainability requirements apply to all new dwellings:

• Energy efficiency
• Water efficiency
• Thermal comfort

Design affects compliance costs. Good orientation reduces required measures.

Costs and Returns

Development Costs (Indicative)

Secondary Dwelling (60m², standard):

• Construction: $150,000-220,000
• Approvals and fees: $10,000-20,000
• Site works: $15,000-40,000
• Total: $175,000-280,000

Attached Dual Occupancy (2 × 150m², new build):

• Demolition: $20,000-40,000
• Construction: $700,000-1,000,000
• Approvals and fees: $30,000-60,000
• Site works: $50,000-100,000
• Total: $800,000-1,200,000

Detached Dual Occupancy (retain existing + new 100m²):

• Construction: $250,000-400,000
• Approvals and fees: $15,000-30,000
• Site works: $30,000-60,000
• Total: $295,000-490,000

Return Analysis

Secondary Dwelling Example:

• Cost: $200,000
• Rental income: $500/week ($26,000/year)
• Gross yield on investment: 13%
• Property value increase: $250,000+

Attached Dual Occupancy Example:

• Total project cost (including land): $2,000,000
• End value (both dwellings): $2,600,000
• Development profit: $600,000 (30%)

Returns vary significantly by location, specification, and market conditions.

The Development Process

Stage 1: Feasibility (2-4 weeks)

Activities:

• Site assessment
• Constraints identification
• Preliminary design options
• Cost estimation
• Return analysis

Outcome: Decision to proceed or not, with clear understanding of what’s possible.

Stage 2: Design and Approval (4-16 weeks)

CDC Pathway:

• Design to Pattern Book or CDC standards
• Documentation preparation
• Certifier engagement
• Lodgement and assessment
• Timeline: 4-6 weeks

DA Pathway:

• Architectural design
• Engineering and consultant reports
• Council pre lodgement (optional)
• Lodgement and assessment
• Timeline: 12-40 weeks

Stage 3: Construction (16-40 weeks)

Secondary Dwelling: 16-24 weeks Full Dual Occupancy (modular): 20-32 weeks Full Dual Occupancy (traditional): 32-52 weeks

Stage 4: Completion

• Final inspections
• Occupation certificate
• Utility connections
• Landscaping
• Rental/sale preparation

Dual Occupancy and LMR

The LMR Advantage

If your property is in an LMR eligible area, dual occupancy becomes significantly more attractive:

Faster Approval: 10 business days via CDC vs 6 to 12 months via DA

Greater Flexibility: LMR provisions often allow larger/higher buildings than standard dual occupancy rules

Pattern Book Designs: Pre approved designs simplify the process

Certainty: Compliance based assessment removes subjective approval risk

Not All Dual Occupancy is LMR

LMR applies to specific suburbs and requires station proximity. Your property may still suit dual occupancy development via other pathways:

• Standard CDC for secondary dwellings (under 60m²)
• Council DA for larger developments
• SEPP Housing provisions

Common Mistakes to Avoid

1. Underestimating Costs

The mistake: Budget only for construction, forgetting approvals, site works, connections, and contingency.

The fix: Allow 15-25% on top of construction costs for all associated expenses.

2. Ignoring Site Constraints

The mistake: Assume a second dwelling is possible without checking easements, flooding, or other constraints.

The fix: Professional site assessment before committing to any design or costs.

3. Poor Design Orientation

The mistake: Position secondary dwelling for construction convenience rather than livability.

The fix: Northern aspect and privacy for both dwellings improves rental potential and values.

4. Underspecifying

The mistake: Build cheap to minimise costs, resulting in poor rental outcomes and values.

The fix: Spec to local market standards. Quality tenants and buyers expect quality finishes.

5. DIY Project Management

The mistake: Attempt to manage approvals, construction, and coordination without experience.

The fix: Engage professionals who understand the process. Mistakes are expensive.

Frequently Asked Questions

Can I subdivide a dual occupancy?

In some cases, yes. Strata subdivision or Torrens title subdivision may be possible depending on council requirements and lot characteristics. This allows separate sale of each dwelling.

Do I need to live on the property?

No. Both dwellings can be tenanted, or one can be owner occupied and one tenanted. There’s no owner occupier requirement for dual occupancy in NSW.

What’s the maximum size for a secondary dwelling?

Standard complying development allows up to 60m² internal floor area. Larger secondary dwellings are possible via DA or, in LMR areas, via the Pattern Book CDC pathway.

Can I do Airbnb from my dual occupancy?

Short term rental rules vary by council. In Sydney, properties can be short term let for 180 days per year when not owner occupied. Check local requirements and strata rules if applicable.

How long until I see returns?

Construction typically takes 4-12 months depending on scale and method. Rental income begins at completion. Property value increase is immediate upon completion.

Start Your Dual Occupancy Project

The first step is understanding what’s possible on your specific site. Our free assessment includes:

• Site constraints analysis
• Dual occupancy configuration options
• LMR eligibility check
• Indicative costs and returns
• Approval pathway recommendation

Check your site’s dual occupancy potential and discover how to maximise your property’s value.