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Thinking about building a Minor Residential Unit (MRU) or better known as a "granny flat" on your property in New Zealand? Big changes are coming in 2025-2026 that will make it faster, cheaper, and easier to add a small dwelling to your section without needing the usual building and resource consents.

Here's everything Kiwi homeowners, landlords, and investors need to know about the new granny flat rules in New Zealand.

What Are the New Granny Flat Rules in NZ?

The New Zealand Government has announced two major reforms to make building granny flats easier:

1. Building Consent Exemption (Commencing Early 2026)

Homeowners will be able to build granny flats up to 70m² without needing building consent if they meet all the following conditions:

Design Requirements:

• Single storey, standalone, and self-contained building (no mezzanine floors allowed)
• Net floor area of 70 square metres or less (measured between internal walls)
• Maximum floor level of 1 metre above ground
• Maximum height of 4 metres above floor level
• Must be at least 2 metres away from any other residential building or legal boundary
• Cannot be built across property boundaries
• Must be classified as a detached dwelling for a single household or family

Construction Materials:

• Roof must use lightweight materials (maximum 20kg per square metre)
• Frame must be light steel or light timber
• Wall cladding cannot exceed 220kg per square metre

Plumbing and Amenities:

• Must connect to network utility operator (NUO) systems where available
• Onsite water systems permitted if no NUO exists or insufficient capacity
• Maximum 30 fixture units
• No pumped systems inside the building
• Main drain must be ≥ DN100 at 1:60 grade
• Branch drains must be ≥ DN65 at 1:40 grade
• Independent electricity and gas supply points (where applicable)
• Electric or gas heaters required
• Level-entry showers will be permitted once relevant LBP licence class is established

Licensed Building Practitioners Required:

• All work must be carried out or supervised by Licensed Building Practitioners (LBPs) and licensed plumbers, drainlayers, gasfitters, and electricians
• The flat must meet the NZ Building Code

Council Notification:

• You must notify the council before starting (via Project Information Memorandum - PIM)
• You must notify the council after completion
• You have two years from PIM issue date to complete the build

This reduces paperwork, delays, and building consent costs significantly.

2. Resource Consent Exemption

A new National Environmental Standard (NES) will require all councils to allow small secondary dwellings on residential and rural-zoned land without resource consent. Resource consent requirements are expected to be removed by late 2025 under the NES, followed by the building consent exemption in early 2026. This will create consistent, permissive rules nationwide, reducing the time and cost to get started.

Important: These changes do not void any development contributions at this stage that contribute to council's cost of infrastructure.

Project Information Memorandum (PIM) - New Requirement

Before you start building your consent-exempt granny flat, you must submit a Project Information Memorandum (PIM) to your council. After completion, you must notify council and provide required documentation. Here's what you need to know:

Before Building Work Starts:

• The PIM enables councils to share relevant information with owners and supports the collection of development contributions
• Councils must advise whether your proposed building work is likely, unlikely, or uncertain to meet the exemption criteria
• This is not an approval process - you can choose to build regardless of council advice
• Councils must advise if your land is subject to natural hazards and whether your design adequately addresses them
• Building on land with natural hazards may require a building consent unless adequate protection is provided
• The PIM must be issued before any building work begins
• You have two years to complete the build from the PIM issue date

When Building Work is Complete: Within 20 working days of completion, you must provide your council with:

• Set of final design plans for building and plumbing/drainage work
• Records of Work (RoW) from LBPs who carried out restricted building work
• Certificates of Work (CoW) from designers for restricted design work
• Energy work certificates (electrical safety certificates and gas safety certificates if applicable)
• Payment of any development contributions

Important: Homeowners who fail to provide documentation within 20 working days may be subject to a new infringement offence.

Benefits of the New Granny Flat Rules

Building a granny flat in New Zealand is about to get a whole lot easier. Here are the key benefits:

• Faster approvals: Less red tape means quicker builds and streamlined processes

• More affordable housing: Ideal for families, downsising, or generating rental income
• Supports multi-generational living: Keep family close while maintaining privacy
• Rental potential: Earn income from a standalone minor dwelling (dependent on RTA classification)
• Boosts for local trades: More work opportunities for Licensed Building Practitioners
• Consistent nationwide rules: The NES ensures all councils follow the same standards
• Cost savings: Eliminating building consent fees and reducing delays saves thousands of dollars

Possible Downsides and Challenges to Consider

While these changes are promising, there are still a few challenges to be aware of:

• Infrastructure pressure: More dwellings can strain local water, sewage, and road network

• Neighbour privacy concerns: Some residents may have concerns about increased density

• Quality risk: Less oversight could lead to shortcuts if builders aren't properly managed or supervised

• Site restrictions remain: Some properties may still require consents due to size, shape, natural hazards, or other factors

• Strict compliance required: You must meet ALL conditions or you'll need a building consent

• Licensed professionals mandatory: All work must be done by or supervised by licensed professionals, which adds to costs

• Development contributions still apply: Councils can still charge for infrastructure costs

• Natural hazard limitations: Properties with natural hazards may not qualify for the exemption

The Three Waters Challenge: Not as "Consent-Free" as It Sounds

While the building consent exemption sounds promising, there's a significant practical barrier that many homeowners will face: three waters infrastructure capacity.

The reality is that you still need council approval to connect to wastewater, water, and stormwater systems. The exemption removes the building consent requirement, but you must still obtain council sign-off through the Project Information Memorandum (PIM) process before you can proceed.

Hamilton City Council - A Case Study in Infrastructure Constraints:

Hamilton is experiencing significant wastewater capacity issues in certain areas of the city. Hamilton City Council has published a Wastewater Capacity Viewer to help property owners check capacity in their specific location. This means that even if you meet all the design requirements for a consent-exempt granny flat, you may not be able to connect to the existing wastewater network in some areas.

Without the ability to connect to council wastewater systems, you may not be able to proceed with your granny flat without an acceptable alternative servicing solution — regardless of the building consent exemption. This effectively creates a barrier before construction can begin.

What This Means for Property Owners:

The new rules require granny flats to connect to network utility operator (NUO) systems where available. Only when no NUO system exists, or the NUO confirms insufficient capacity, can you use onsite water systems. However, many councils may not approve builds in areas where connecting would overload already strained infrastructure, meaning you may not be able to proceed unless a compliant servicing solution is available or consented.

This creates a situation where the "streamlined" process isn't as streamlined as it appears. You're still going through a council approval process, just under a different name. If your area lacks sufficient pipe capacity, the exemption provides little practical benefit.

The Bottom Line:

Before getting excited about building a consent-exempt granny flat, check with your local council about three waters capacity in your specific area. In cities like Hamilton and other growing urban centres, infrastructure constraints may be the biggest barrier — not the consent process itself.

This is particularly important to understand: the policy change addresses regulatory barriers but doesn't solve the underlying infrastructure capacity issues that prevent development in many areas.

Do You Still Need to Follow Boundary Rules?

Yes, absolutely - until the National Environmental Standard comes into full effect. The new granny flat rules include specific boundary requirements that must be met:

Minimum Setbacks:

• Your granny flat must be at least 2 metres away from any other residential building or legal boundary
• You cannot build across property boundaries between allotments

Other Rules That Still Apply (Until NES Takes Effect):

• Height-to-boundary rules: You may be restricted in building height near your fence line
• Site coverage limits: You can only build on a certain percentage of your land
• Natural hazard overlays: Properties subject to flooding, erosion, or other hazards may have additional restrictions
• Easements and drainage: You can't build over certain underground services or shared accessways

The National Environmental Standard is intended to standardise permissive planning rules nationwide. Once it takes effect (expected late 2025), it will override restrictive local rules and create consistent requirements across all councils. Until then, existing council planning rules still apply, and you may need to apply for a variation if your proposal doesn't meet local requirements.

When Do These Changes Take Effect?

Building Consent Exemption: Expected to commence in early 2026 following the passage of the Building and Construction (Small Stand-alone Dwellings) Amendment Bill and supporting regulations.

Important Note: Existing building work already underway is not eligible to be exempt from requiring a building consent. The exemption only applies to new granny flats started after the law commences.

Resource Consent Exemption (National Environmental Standard): Resource consent requirements are expected to be removed by the end of 2025 via a National Environmental Standard, with the building consent exemption commencing in early 2026. This will standardise permissive planning rules across all councils.

Key Takeaways for Kiwi Property Owners

This is a step in the right direction for addressing New Zealand's housing shortage and making it easier for families to add secondary dwellings to their properties. However, like most new policies, there are still some grey areas to work through.

What You Need to Remember:

1. You must meet ALL design and construction conditions to use the building consent exemption

2. All work must be carried out or supervised by licensed professionals

3. You must submit a PIM before starting and provide documentation within 20 days of completion

4. The 2-metre boundary setback is mandatory

5. Natural hazards on your property may require a building consent regardless of the exemption

6. Development contributions still apply

Getting it right will mean good communication and clear education for property owners, builders, councils, and everyone in between.

We're keeping a close eye on when these changes will roll out and how each council plans to adopt them. The early 2026 commencement date for the building consent exemption is now confirmed, but property owners should stay informed about their specific council's implementation.

Frequently Asked Questions

Q: Can I build a two-storey granny flat without consent? A: No, the building consent exemption only applies to single-storey dwellings.

Q: Can I do any of the work myself? A: Very limited. Homeowners intending to live in the granny flat can wire certain parts themselves using the domestic exemption under the Electricity Act 1992, but this work must be inspected by an electrical inspector. All other work must be done by licensed professionals.

Q: What happens if I don't meet all the conditions? A: You will be required to get a building consent through the standard process.

Q: Do I need a building consent if my property has natural hazards? A: Possibly. If your land is subject to natural hazards and adequate protection hasn't been provided, you may need a building consent. Your council will advise on this when you submit your PIM.

Q: Can I use the exemption for a granny flat I'm already building? A: No, the exemption only applies to new building work started after the law commences in early 2026.

Q: What if my area doesn't have enough wastewater capacity? A: This is a critical issue, particularly in Hamilton. Even with the building consent exemption, you must connect to council three waters systems where they exist. If your area lacks capacity, council may not approve the connection, which means you cannot proceed with the build. Check with your council about infrastructure capacity in your specific area before planning your granny flat.

Planning to Rent Out Your Granny Flat?

If you're building a granny flat as a rental property, it's essential to understand your legal obligations under New Zealand law.

Residential Tenancies Act (RTA) Requirements

The RTA DOES Apply to Granny Flats

When you rent out a granny flat as a separate dwelling, it is covered by the Residential Tenancies Act 1986. This means you have the same legal responsibilities as landlords renting out any other residential property.

A granny flat is considered a separate dwelling under the RTA when it has:

• A separate entrance to the main house
• Its own facilities (the tenant doesn't have access to facilities in the main house)
• A separate tenancy agreement from the main house

Critical: You Cannot Opt Out of the RTA

You cannot contract out of the RTA or use alternative agreements like "flatmate agreements" or "house-sharing agreements" to avoid your obligations. Any attempt to enter into an agreement that is inconsistent with the RTA will have no effect, even if both parties agree in writing.

The RTA applies to both lawful and unlawful dwellings, meaning even if your granny flat doesn't have proper consent or building compliance, you must still follow RTA rules.

Healthy Homes Standards

Your granny flat must meet Healthy Homes standards to be legally rented out in New Zealand. This includes requirements for:

• Heating: Fixed heating that can maintain 18°C in the main living area

• Insulation: Ceiling and underfloor insulation meeting specified standards
• Ventilation: Adequate ventilation including openable windows and extractor fans
• Moisture ingress and drainage: Protection from water penetration and dampness
• Draught stopping: Reducing unnecessary gaps and draughts

All rental properties, including granny flats, must comply with these standards.

Professional Property Management Support

Propertyscouts Riverside is a property management company serving Hamilton that can help you:

• Ensure your granny flat meets Healthy Homes compliance before listing

• Navigate Residential Tenancies Act requirements and obligations
• Manage your granny flat rental professionally with compliant tenancy agreements
• Handle tenant placement, rent collection, and property maintenance
• Conduct regular property inspections and manage tenancy issues
• Maximize your rental return while staying fully compliant with the law

Building a granny flat is just the first step, managing it properly as a rental investment requires expertise in tenancy law, compliance standards, and property management best practices.

This article was last updated on October 24, 2025, with the latest information from the New Zealand Government about granny flat building consent exemptions.